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MANILA, PHILIPPINES (12 October 2005) - A new thrust toward private sector operations will be at the forefront of ADB's operations in Kazakhstan in 2006-2008, according to ADB's Country Strategy and Program (CSP) Update.

Public sector technical assistance (TA) and investments will create an enabling environment for the private sector, as well as selected public sector lending programs in rural development and water supply aimed at poverty reduction, the Update says.

Government public sector borrowing is highly selective, emphasizing projects with strong development impact or innovative approaches to mobilizing central Government funds for local investment. Currently, ADB plans to process loans amounting to $50 million a year for Government consideration.

"The rapid development of this oil rich economy has led to an inevitable shift in ADB's development priorities," says Adrian Ruthenberg, a Director in ADB's East and Central Asia Department. "Focal areas for ADB activity will be creating inclusive growth and human development through private sector development, while maintaining environmental sustainability, and promoting regional cooperation."

Three loans are planned for the period - one for agriculture and natural resources/rural development in each of 2006 and 2008, and a water supply, sanitation, and waste management project in 2007. Private sector operations will be emphasized as the main vehicle for future ADB operations in the country and gradually increase over time.

The nonlending program will continue to be an important instrument for ADB operations, with ADB providing about $1.5 million a year. The Government will increase its cost sharing over technical assistance projects to reach 50% for each of ADB and the Government in 2007-2008, compared to the present 60/40 mix. TAs over the period will include project preparatory and advisory work, and economic, thematic, and sector TA projects.

Kazakhstan continues to be a strong proponent of regional cooperation and will take part in several regional TAs over the three years, including projects involving regional railways, roads, and cross-border harmonization, and gas transmission and power modernization.

Continuing growth, job creation in the private sector, and pro-poor growth have raised living standards in Kazakhstan. In 2004, real per capita incomes rose by 13%. Reducing rural-urban disparities is now a key challenge.

Gross domestic product is projected to grow at around 9% over the medium term, assuming continued high oil prices, foreign direct investment flows, good economic management, and continued political stability.

As of the end of 2004, ADB had approved 12 loans for Kazakhstan amounting to more than $500 million and had approved TAs totaling $25 million.

CSPs define ADB's medium-term development strategy as agreed with the country. A CSP 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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