The EBRD’s Board of Directors has approved a new country strategy for the Kyrgyz Republic, which is designed to ensure continued EBRD support for the recovery of the country’s economy and sustainable growth after a period of social and political unrest in the recent past.
In the next three-year period covered by the new strategy, the Bank will continue helping various sectors of the Kyrgyz economy by promoting the private sector and stabilising the business operations in the country.
The EBRD’s key priorities under the new country strategy will be supporting local private enterprises, with a particular focus on the agribusiness sector, stabilising and developing the country’s financial sector, and strengthening vital infrastructure.
The new strategy was adopted after an extensive consultation process involving civil society organisations in the Kyrgyz Republic, the Kyrgyz authorities, the international community and other important stakeholders.
“The EBRD has been playing an active role in the Kyrgyz Republic’s development. It will continue to remain a key funding source, as well as a responsible institutional building partner for the country’s banking sector and private sector development. With the new country strategy, we will be able to contribute to the recovery of the economy and revive investors’ confidence in the Kyrgyz Republic,” said Olivier Descamps, Managing Director for Turkey, Eastern Europe, the Caucasus and Central Asia.
The strategy spells out how the Bank, together with its partners, will help municipalities in the Kyrgyz Republic to have better services, including improved water and transport systems. This will be achieved by launching new projects to improve water supply, solid waste and public transport facilities in Bishkek and the country’s southern regions.
The EBRD will aim to extend its Local Currency Lending Programme, which was launched with the assistance of risk-sharing donor funds earlier this year, to build up local sources of domestic funding and reduce the use of foreign exchange in the country’s financial system.
This is particularly important for microfinance institutions, which historically have received only foreign exchange funding, but have constrained hedging opportunities and remain limited by law to lend solely in local currency.
The Kyrgyz Republic has been at the forefront of the Bank’s efforts to work with non-bank microfinance institutions. Lending to private businesses stood the test of recent political unrest and assisted various sectors of the country’s economy. With its investments, the EBRD helps smaller and poorer borrowers meet their needs, especially in the country’s remote areas.
Other business priorities for the Bank in the Kyrgyz Republic during the new strategy period include promoting energy efficiency and improving the national energy efficiency legislation. The Bank will encourage the development of country-wide incentive schemes for energy efficiency and renewable energy promotion.
The EBRD’s new strategy for the Kyrgyz Republic acknowledges the country’s major step forward in progress on the path to democracy and the market economy. The document also outlines the remaining institutional and economic challenges that the Kyrgyz Republic still faces as an early transition country.
These include further improvement of the business environment in the country, by establishing the rule of law with fair and transparent regulation procedures, as well as respecting and protecting private property rights.
The Kyrgyz authorities should continue to show commitment to stabilisation and reform implementation to secure sustainable economic growth, while rebuilding confidence, including that of investors, should remain one of the main priorities for the government.
To date, the EBRD has committed about US$ 450 million in various sectors of the Kyrgyz economy, mobilising additional investments of about US$ 650 million in over 70 projects.
Over the past three years covered by the last strategy, the Bank’s investments in the Kyrgyz Republic nearly tripled from US$ 63 million in 2008 to US$ 214.6 million at the end of 2010. In 2010 alone the EBRD signed eight projects worth a total of US$ 115.1 million. Some 84 per cent of the Bank’s projects have been investments in the development of the country’s private sector.