ADB approves new CPS to foster economic growth in Kyrgyz Republic

To improve the investment climate for private enterprise, ADB will provide policy-based support for reforms that make it easier to trade and do business.

The Asian Development Bank's (ADB) Board of Directors has endorsed a new 5-year country partnership strategy (CPS) to promote sustainable economic growth, leverage regional cooperation to reap the benefits of access to larger markets and improve the quality of life in the Kyrgyz Republic.

The 2018–2022 strategy is expected to provide $641 million in grants and sovereign loans to the Kyrgyz Republic, which joined ADB in 1994. Sovereign operations will focus on energy, transport, education, public sector management, water supply and sanitation, and agriculture. Private sector support will explore opportunities in agribusiness, energy, and telecommunications. To date, ADB has provided about $1.7 billion in loans and grants to the country. ADB is the Kyrgyz Republic’s largest multilateral development partner.

“We are committed to helping the government achieve its development plans,” said ADB Country Director for the Kyrgyz Republic Ms. Candice McDeigan. “Our new CPS is focused on achieving higher and broader-based economic growth, creating jobs, and reducing poverty levels, especially in rural areas.”

The Kyrgyz Republic, a landlocked country with a small population of just over 6 million, needs to attract investments and diversify its economy. Economic growth has been driven largely by one commodity, gold, and remittances from workers in Kazakhstan and Russia. The economy faces constraints to create adequate jobs in the formal sectors, and about 25% of the population lives below the poverty line, with many of those living in rural areas and in the south of the country.

A priority for the government is to identify and invest in new areas of economic growth in select regional centers and towns. It is also focused on increasing the effectiveness of public spending, managing debt levels, and trade imbalances, and strengthening the investment environment.

Given the wide-ranging needs of the country, ADB’s strategy builds upon its previous operations and aligns with evolving government priorities. The CPS supports economic diversification through investments in transport and energy, particularly improving the country’s aging hydropower plants to increase supply and boost power exports to neighboring countries. To improve the investment climate for private enterprise, ADB will provide policy-based support for reforms that make it easier to trade and do business.

The CPS will improve access to public and social services. ADB will re-engage in the agriculture sector through project financing to improve services, increase productivity and the sector’s resilience to climate change and natural disasters, as well as improve supply chains to enable improved access to regional markets. ADB will continue its support for policies and programs to help students and workers acquire the training and skills they need to find work in a modern economy. A priority will be placed on reforms to secondary and tertiary education to help produce more science and technology graduates. The new CPS will also deliver safe drinking water and provide better sanitation systems in select urban and rural areas where infant mortality rates almost double that of the cities.

A key obstacle to further economic development has been the Kyrgyz Republic’s lack of advanced business facilities, including poor internet connectivity. To address this issue, the government has launched the Taza Koom digital transformation program, which aims to increase access to the internet, improve government services, and attract more private sector investment to the ICT industry. ADB will assist in the planning and management of this ambitious program.

The CPS will also leverage regional cooperation and integration initiatives to assist economic diversification and improve competitiveness. ADB will continue to support the government’s push to strengthen regional ties through the Central Asia Regional Economic Cooperation (CAREC) Program, under which the improvement of transport and trade corridors will continue to be important. The CPS will also provide multisector support to horticultural trade and tourism services, especially in the country’s north and south, to increase competitiveness and open up new markets outside of the country.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 67 members—48 from the region. In 2017, ADB operations totaled $32.2 billion, including $11.9 billion in co-financing.