/
: / Strategies / National Poverty Reduction Strategy (2003-2005)




Kyrgyzstan Review, 10 years ago




CHAPTER II. SUSTAINABLE STABILIZATION AND DYNAMIC NATIONAL DEVELOPMENT

A. From Strategy to Action

19. The CDF was approved at the National CDF Assembly on May 29, 2001. Participants of the Assembly included President Askar Akaev, leaders of all elements of government, nongovernment organizations (NGOs), political parties, public organizations, local communities and mass media. CDF became the national development vision for the next ten years. The overall goal of the CDF is to achieve political and social well being, economic prosperity of the people of Kyrgyzstan, together with freedom, human dignity and equal opportunities for all.
 
20. The NPRS, an interim version of which was developed concurrently with CDF, was proposed as the first step in CDF implementation.
 
21. The CDF and NPRS programs have been thoroughly evaluated by national and international experts, and several international financial organizations. At the end of 2001, the interim NPRS (I-NPRS) was approved by the World Banks Board of Directors and the Executive Council of the IMF.
 
22. The key priority of these national strategies is the reduction of poverty through sustainable economic growth and active continuation of reforms in the social, political and economic areas.
 
23. The development and implementation of the programs under CDF and NPRS has been a unique experience for Kyrgyzstan. All elements of the State, civil society, the private sector and the donor community engaged in a process that was based on a constructive dialogue regarding the achievement of common goals. The partnership approach has been highly praised by international organizations.
 
24. During the years 2001 and 2002, active implementation of CDF was undertaken, NPRS was finalized and the tasks identified in I-NPRS were implemented. Partnership and collaboration between the State and civil society has continued.
 
25. CDF and NPRS acquired institutional status through the establishment of the National CDF Council and its executive unit, the CDF Secretariat.
 
26. The Council has approved the general methodology and principles for finalizing and implementing NPRS. Other measures have included establishment of coordination committees to supervise areas of sustainable economic growth, social protection and human development, and effectiveness and transparency of state governance. The coordination committees have formed 23 working expert groups. All regions and Bishkek City have regional councils that coordinate the activities of expert working groups. Members of these coordination and working units include representatives of all elements of government and civil society.
 
27. At the National Forum, Poverty Alleviation: Peoples Initiative and the Responsibilities of the State, held in January 2002, and at the meetings of the Government of Kyrgyz Republic, the President outlined specific tasks on activization of reforms and mobilization of national resources to support consistent reduction of poverty and rising living standards for Kyrgyz citizens.
 
28. The legal framework for implementation of reforms in political, social, and economic spheres has been expanded. Over 100 laws were passed in the first half of 2002, laying the ground for the stabilization of the financial and economic situation, liberal development of entrepreneurship and the real sector, as well as fruitful implementation of the most important national, state, regional and sectoral development programs in the social and political spheres.
 
29. Active steps have been taken in further democratization, decentralization and improvement of state governance. The first democratic elections for local self-government leaders were held at the end of the year 2001. As a result of these elections, all localities of the Republic, 460 aiyl okmotu (village governments), 12 towns of district, 9 towns of regional subordination, and Bishkek City have adopted the principles of democratic local self-government.
 
30. Administrative reform measures undertaken in 2001 aimed at raising the effectiveness of state governance. Parallelism and duplication of work have been eliminated, while the redistribution of certain functions and powers has resulted in the liquidation of 11 ministries, state committees, agencies and commissions, accounting for 30 percent of all state agencies. In 2001, 10 percent of the total number of state employees was reduced, representing 1,200 people. The plan for the year 2002 provides for a further five percent reduction in the number of state employees.
 
31. Active civil service reform has fostered competitive selection of personnel, mechanisms for introduction of qualification upgrading courses for state employees, and the creation of job incentives. Other activities have included adoption of codes of ethics and establishment of commissions to monitor application of professional ethics in state institutions. Large-scale action has been launched against corruption.
 
32. Reform aimed at supporting sustainable economic growth has been a critical area for attention because of its importance in the reduction of poverty.
 
33. New measures have been adopted in order to improve state policy on investment and the business environment. New legislation has created favorable conditions through the reduction of the tax burden (with a simultaneous expansion of the tax base) and the curtailing of administrative and bureaucratic barriers.
 
34. The newly-established Economic Policy Council, chaired by the Prime Minister, coordinates progress of economic reform, provides timely response to changes in the countrys economy, reviews and makes decisions on major issues arising in the process of economic and social reform.
 
35. In July 2002, the town of Cholpon-Ata hosted the Second Investment Summit that brought together the President of Kyrgyz Republic, government officials, donor organizations and large foreign companies. Participants at the summit discussed specific policy measures, implementation of which will create more conditions for the promotion of direct investment. These measures will enhance business activity, boost inflow of funds into the state budget, and mobilize domestic resources for the achievement of the goal of sustainable development.
 
36. The decision made by Paris Club creditors in March 2002 on the alleviation of Kyrgyzstans external debt was a key stabilization factor. Kyrgyzstan was granted Houston terms with a goodwill clause. The debt rescheduling agreement consolidated all loans and credits contracted by the Kyrgyz Republic before August 31, 2001 from Paris Club creditors, Germany, Denmark, the Russian Federation, Switzerland, France, Japan, and Turkey (Turkey is not a member of Paris Club but is a major creditor of the Kyrgyz Republic). By the end of 2004, after completion of the Poverty Reduction and Growth Facility (PRGF) provided by the IMF, the Paris Club will consider the possibility of granting Kyrgyzstan the goodwill conditions, i.e. subject to successful implementation of PRGF, Paris Club creditors promise to reduce not only the amount of interest on loans but the principal debt as well. This decision substantially lessens the external debt pressure on the state budget and ensures economic and social development of the country under CDF/NPRS programs.
 
37. Reforms have continued supporting establishment of a fair society, the concept embracing human development, protection of human rights and freedoms, creation of jobs and reduction of poverty, targeted and efficient systems of social protection, accessibility to health and education services, as well as development of culture and science.
 
38. The Presidential Decree on measures to enhance civil rights and freedoms of individuals and citizens in the Kyrgyz Republic has laid a foundation for action in the human rights area. Human rights activities and judicial and legal reforms were widely discussed at three events: at the Second Round Table, Kyrgyzstan at the Threshold of the XXI Century: Safe and Sustainable Development in Conditions of Democracy, at the Third Round Table, Democracy, the Road to a Stable and Better Future, as well as at the conference on Constitutional Guarantees of Rights and Freedoms of Individuals and Citizens, at the Fourth Convention of Judges and at the Lawyers Convention.
 
39. Several major national and regional programs, supporting further development of state and society, have been launched after consultation with civil society. Some of the most significant national documents approved in this period were the Education Development Concept to year 2010, the National Strategy on Information and Communication Technologies, the National Action Plan on Gender Equality for 2002-2006 (and corresponding action matrix), and the Manas-2 Health Care Reform Program.
 
40. Reforms and targeted measures have helped to improve the main macroeconomic aggregates. In 2001, GDP grew at the rate of 5.3 percent, while inflation leveled at 3.7 percent in December - the lowest inflation figure in all reform years. The exchange rate of the national currency, the som, to the United States dollar remains stable. National agricultural product rose by 6.8 percent, retail trade turnover experienced a 5.9 percent increase, paid services to the population rose by 1.5 percent. In the first 11 months of 2001, a positive trade balance amounted to US$23.6 million. In the same period, the Republic was able to realize a budget surplus of 0.1 percent of GDP, and a 12 percent increase in the inflow of taxes to the budget.
 
41. Concerted action in the implementation of CDF and NPRS, together with economic stabilization and the support rendered by the donor community, has helped to make important decisions in the area of targeted social assistance. On 1 April 2002, the level of state benefits to poor families and citizens was raised on average by 20 percent; the minimum income level of individuals eligible for socially protected energy tariffs was increased to 350 soms per month; salaries of social workers, calculated on the basis of a unified salary scale, have been raised by 15 percent. Additional measures have been approved for social assistance to World War II veterans and compensatory payments have been introduced to pensioners for increased electricity tariffs. In 2002, eligible categories of poor citizens will receive free and subsidized medical services through a system of state guarantees.
 
42. Much work is being undertaken during the International Year of Mountains on implementation of the National Strategy and Action Plan for Sustainable Development of Mountainous Territories in the Kyrgyz Republic.
 
43. Development of policy measures and specific actions for the achievement of CDF/NPRS goals and the finalization of NPRS have been achieved through productive collaboration and partnership dialogue with civil society. Many consultations have been held with NGOs and local communities involving national and foreign experts.
 
44. Much support is being providing by multilateral financial institutions and donor-countries in the implementation of social and economic reforms in the Republic, as well as in the tasks identified in CDF/NPRS. Kyrgyzstan welcomes and supports the decisions and recommendations made at international forums and conferences, including the International Poverty Reduction Strategy Conference that took place in Washington D.C. in January 2002, the London meetings of government officials and international organizations on debt servicing and fostering of economic growth in CIS countries, as well as at a number of other international meetings on various poverty- related issues.
The Kyrgyz Republic actively cooperates with the world community, multilateral financial organizations and donor-countries, and is ready to make its input into the fight against international terrorism and religious extremism, drug trafficking and prevention of global and regional conflicts.
 
45. Notable features of the NPRS are its focus on identified measures, prioritization, implementation consistency and identified financial resources. Only efficient use of available reserves and close partnership between the State and civil society can ensure success of activities.
 
46. NPRS has been finalized in close contact of all elements of government, with civil society and with the support and advice of multilateral and bilateral donors. NPRS will accelerate reforms in order to reduce all types of poverty, promote full realization of human rights and values, and foster sustainable development of individuals, society and the State. NPRS has been finalized using updated and renewed poverty data.
 
47. NPRS has summarized the main issues and identified priorities and mechanisms for attainment of goals. The measures provided in the strategy have been developed in the light of financial and other requirements, as well as their expected outcome.
 
48. Implementation of NPRS will be monitored in a most transparent way, using the principles of constructive partnership through IT-based methodology.