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"Silk Road" Between Kazakhstan and Kyrgyz Facilitates Regional Cooperation

MANILA, PHILIPPINES (31 October 2000) - The road linking the Central Asian Republics of Kazakhstan and Kyrgyz Republic will be rehabilitated with the help of a US$70 million loan approved today by the Asian Development Bank.

The road not only connects Almaty in Kazakhstan with Bishkek in Kyrgyz Republic but is part of the famous Silk Road and a conduit between Europe and the People's Republic of China. Twenty five percent of the traffic - largely agricultural and industrial goods - is international. This is also the first subregional cooperation project in Central Asia.

The project aims to develop an efficient and safe subregional road link for the movement of people, goods and vehicles. "An efficient regional road system will contribute significantly towards regional economic cooperation which will help realize the development aspirations of the land-locked Central Asian Republics," says Sangpa Tamang, ADB's mission leader for the project.

The project will repair 204 km of the road in Kazakhstan and 41 km in Kyrgyz Republic. To encourage privatization as the countries move towards market-based economies, the project will establish a pool of equipment which can be rented out to private contractors competing for road construction and maintenance work. Importantly, the project will also modernize border control facilities and procedures, including the customs post at the Akhzhol-Chu border.

In addition, ADB will provide technical assistance grants of US$750,000 for Kazakhstan and US$440,000 for Kyrgyz Republic to help implement a cross-border agreement and improve coordination and management of road safety. The grant will come from the Japan Special Fund.

The total cost of the road project is estimated at US$119.1 million: the Kazakh component will be US$112.4 million, the Kyrgyz part US$6.7 million. The US$65 million loan for the Kazakh stretch will come from ADB's ordinary capital resources. This loan will have an interest rate determined in accordance with ADB's pool-based variable lending rate system for US dollar loans. It is repayable over 24 years, including a grace period of 4 years.

The US$5 million loan for the Kyrgyz part will come from ADB's concessionary Asian Development Fund. The loan is repayable over 32 years, including a grace period of 8 years, and carries a one percent interest during the grace period and 1.5 percent thereafter. The Ministries of Transport and Communications of both countries will be executing agencies for the project. The Kyrgyz part is due for completion by end-2003, the Kazakh component by end-2004.

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