: / Strategies / Kyrgyz Republic Country Assistance Strategy (2003)

Kyrgyzstan Review, 10 years ago

IV. Bank Group Program

Strategic Framework

The CAS focuses on three key priorities, each corresponding to a priority focus of the NPRS. Within each, the CAS seeks to identify and address the most pressing needs, particularly taking into account the Poverty Assessment, which stresses the importance of targeting rural employment and addressing deteriorating infrastructure and social services, the PER, which stresses the importance of establishing a realistic and affordable fiscal framework that focuses funds on high priority social areas while strengthening central and local governance, and the FSAP, which emphasizes the importance of building confidence in the financial sector.
Supporting Private Sector-Led Growth:  A key focus of the NPRS is to achieve sustainable economic growth. Within this, private sector-led growth will be essential, and will be given the highest priority, particularly given the limits imposed on public investments imposed by the high levels of external debt. There are three key drivers of private sector-led economic growth in the economy agriculture and agro-processing, energy and industry, and small enterprises and IDA and the IFC will be active in continuing to help the Kyrgyz Republic implement reforms and investments in these areas. IDA and the IFC will also seek to create the conditions for local entrepreneurs to grow and diversify the economy through Community Driven Development projects. IDA will also help the Kyrgyz Republic develop plans against natural disaster risks which could derail growth. 
Providing Essential Services: A second key priority within the NPRS is to build a fair society. Within this, there is an urgent need to help stem deterioration in key infrastructure and social services. The Kyrgyz Republic inherited a reasonably developed, if basic, infrastructure and social service systems which have been slowly deteriorating since independence. The Kyrgyz Republic cannot afford to put off this rehabilitation, but also cannot afford to rehabilitate it all. Selectivity and systemic reform are critical, and IDA will seek to empower local communities to identify priorities, in keeping with the decentralized vision in the NPRS. IDA will also target social services such as education in the rural areas where they are most needed.
Strengthening the Governance Framework: A third priority of the NPRS is the formation of an effective state. In IDAs client survey, governance was identified as one of the most important issues facing the country. A key starting point is the Governments recent decision to build a public-private partnership in the energy sector and reduce quasi-fiscal operations, as supported under the ongoing CSAC program. The CAS will support the government in broadening these reforms through a Governance Structural Adjustment Credit, which will seek to increase public sector accountability, transparency, and efficient resource management. The NPRS recognizes the need to combine decentralization with increased support to build local capacity, and the CAS will also help the government to introduce necessary measures in this area. 
In designing particular interventions within these areas, the World Bank Group program is based on the following three principles:
Gradual Shift to Programmatic Operationswith Flexibility: In the first two years of the CAS, operations will be split between traditional adjustment and investment mechanisms. However, based on progress in implementing the NPRS framework, building partnerships particularly in the field of health, and progress in working with the government in implement strategic plans as per the ESW program, the CAS envisages introducing programmatic support for the Kyrgyz Republic in the form of a Poverty Reduction Strategy Credit (PRSC) by the end of FY05 and a Sector Wide Approach (SWAp) in health and social protection in FY06. IDA recognizes that this will entail intensive work during FY04 in follow through on the NPRS, fiduciary ESW and on partnership building. The CAS also builds in flexibility to adjust this approach based on country conditions
Continued Focus on ESW and Capacity Building: As discussed in the FY02 CAS Progress Report and consistent with OEDs recommendations, IDA focused significant attention during FY02 and FY03 on providing the Government with a strong level of analytic work and assisting it with capacity building, including preparing a Poverty Assessment, a Public Expenditure Review, a Financial Sector Assessment Paper, a Country Procurement Assessment, and a Country Financial Accountability Assessment. During this period, IFC also helped the government establish a new framework for leasing and microfinance, a plan for sustainable tourism, and a study on the potential for the IT/Telecom sector. Most of the core diagnostic is now in place. However, implementation will require continued focus on capacity and ESW. A key element at the national level will be the preparation in FY04-05 of a Development Policy Review, which will help consolidate strategies in each sector and assess next steps.  
Selectivity and Partnership: The CAS focuses on key areas - including agriculture, energy, health, pensions, and finance -- in which the Bank Group has already developed an expertise or where the Bank Group can bring particular expertise to bear. However, selectivity will also be strengthened through deepening donor partnership, within the context of the NPRS and under the leadership of the Government. IDA will particularly expand partnerships through the shift to programmatic operations. IFC has also begun to expand its partnership activities, including through the recently launched EBRD/IFC/Swiss Central Asia Microlending facility with technical assistance support provided by USAID.