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Annual Report 2003 : Moving the Poverty Reduction Agenda Forward: Priorities and Outcomes : East and Central Asia

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Kyrgyz Republic

Strategy and Policy Dialogue.
The CSP 2004–2006 was approved with the overall objective of reducing poverty by promoting private sectorled growth and selected areas of human development. The major areas of support to reduce poverty are (i) agriculture and rural development to induce further productivity and to expand exports; (ii) financial sector development to strengthen the banking sector, improve depositor confidence, and deepen bank intermediation; (iii) regional cooperation to reduce cross-border transport and trade bottlenecks; and (iv) investments in basic education and early childhood development. The geographic focus will be on the poorer areas of the country. The CSP was based on the Government’s development objectives and the Comprehensive Development Framework to 2010, on the National Poverty Reduction Strategy 2003–2005, on the Millennium Development Goals (MDGs), on the strategic focus, ongoing and planned programs and projects of other external agencies, and on ADB’s past knowledge and experience in the country.

ADB is a major source of development assistance. Several completed and ongoing projects supported by ADB contributed to achieving economic growth, reducing poverty, and meeting the MDGs. Such interventions include those in agriculture, roads, education, water supply, and finance including rural finance. The Kyrgyz Republic has achieved significant progress in reducing poverty levels which fell from 52% in 2000 to 44.4% in 2002. Progress toward meeting other MDGs has been satisfactory, particularly in universal primary education. Consultations and cooperation with civil society, particularly with NGOs, increased in 2003. ADB, through its Kyrgyz Resident Mission, participated in improving aid coordination and in harmonizing operational policies and procedures.

Policy dialogue with the Government focused on legal reforms in the financial sector, strengthening the rural financial sector, and prioritizing the public investment program. Under the ADB-funded Corporate Governance and Enterprise Reforms Program II, the Government initiated steps to and progressed in identifying weaknesses in the judicial system thus improving the legislative framework for third-party arbitration, bringing finality to court judgments, setting up a corporate governance rating system, improving the legal framework for accounting and auditing, and strengthening corporate governance in commercial banks. ADB has been advising the Government on the Public Investment Program since June 2000, and in November 2003, the Government endorsed the recommendations of an ADB-supported technical assistance study on the principles for prioritizing it. ADB is also working closely with the Government, particularly with the national bank, to strengthen the institutional and regulatory structure for rural and microfinance, including the development of credit unions.

Loans and Technical Assistance.
Two loans for $15.5 million were approved: one for $10.5 million for community-based early childhood development and one for $5 million for emergency rehabilitation. Two technical assistance projects totaling $1.1 million were approved.

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