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ADB Earmarking $30 Million per Year in Loans to Kyrgyz Republic for 2006-2008

MANILA, PHILIPPINES (8 December 2005) - ADB is earmarking about US$30 million per year in assistance to Kyrgyz Republic in 2006-2008 to reduce poverty and promote private sector led growth and human development, according to a Country Strategy and Program (CSP) Update.

The current CSP for Kyrgyz Republic expires next year. The next country strategy will be prepared jointly with the World Bank, DFID of the UK, Swiss Cooperation Office and a few other bilateral donors based on the Government's planned development blueprint, the National Poverty Reduction Strategy II due out in 2006.

The CSP stresses investing in agriculture; reforming the financial sector to stimulate domestic savings and investment; improving trade and road linkages with regional markets; and boosting social services, particularly basic education and early childhood development.

To achieve these aims, ADB projects tentatively planned over the three-year period will tackle agricultural management and land improvement, reform of revenue administration, childhood development, road maintenance, and state enterprise reform. Regional loans would be allocated to gas transmission improvement, road maintenance, and the Bishkek-Torughart Road rehabilitation.

In addition, up to $20 million annually could be available for key regional projects. The assistance pipeline also includes a total of about $4.5 million over the period in technical assistance grants, mostly for project preparation.

Kyrgyz Republic experienced high growth in 2004. However, growth is expected to fall back drastically in 2005 before stabilizing at above 5% in 2006 and 2007.

"The medium-term challenge is for the country to achieve sustainable growth while pursuing fiscal consolidation without hurting the most vulnerable groups," says M. Ashraf Malik, ADB Country Director in Kyrgyz Republic. "This requires a focus on reducing deficits, carrying out tax reforms, improving public spending, and encouraging greater private sector investment."

Up to the end of 2004, Kyrgyz Republic had received 24 loans amounting to $571 million equivalent and 59 technical assistance grants totaling $35 million. The performance of ADB's portfolio in the country up to this time was generally satisfactory.

CSPs define ADB's medium-term development strategy as agreed with the country. An update is usually prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB's operational program.

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