EBRD President visits the Kyrgyz Republic

By Sergiy Grytsenko

A senior delegation from the European Bank for Reconstruction and Development (EBRD), led by President Thomas Mirow, is visiting the Kyrgyz Republic on 23-24 May. Mr. Mirow is accompanied by Memduh Akcay, EBRD Board Director for Kyrgyzstan, Olivier Descamps, Managing Director for Turkey, Eastern Europe, the Caucasus and Central Asia, Masaru Honma, Director for Central Asia, Christoph Denk, President’s Adviser, and Mahir Babayev, Senior Political Counsellor.

During the two-day visit, the EBRD delegation members will have a number of bilateral meeting with senior Kyrgyz government officials, including President Roza Otunbayeva, Prime Minister Almazbek Atambayev, Speaker of Parliament Ahmatbek Keldibekov, and Minister of Finance Melis Mambetjanov. The results of these meetings will be reflected in the Bank’s new country strategy for the Kyrgyz Republic that is expected to be presented for the Bank’s Board approval in September this year.

President Mirow will reinforce the EBRD’s strong commitment to helping various sectors of the Kyrgyz economy and supporting private enterprises in the Kyrgyz Republic, working to ensure the continued recovery of the country’s economy and sustainable growth after a period of unrest in the recent past.

The EBRD’s key priorities under the EBRD’s new country strategy in the Kyrgyz Republic will be  supporting local private enterprises, with a particular focus on agribusiness sector, stabilising and developing the country’s financial sector, and strengthening vital infrastructure.

“We will exchange views with our Kyrgyz counterparts and reiterate the EBRD’s commitment in developing the private sector and stabilizing business operations in the country. At the same time, a key priority for the Kyrgyz authorities will be to stabilise the economy and rebuild confidence, including that of investors. This depends on firmly establishing the rule of law, protecting private property rights and developing a fair and transparent business environment,” President Mirow said.

The EBRD plans to launch a local currency lending programme with the assistance of risk-sharing donor funds. 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 Bank would like to enhance policy dialogue in this area by signing a Memorandum of Understanding with the Kyrgyz authorities on encouraging local currency lending. This will need to be coupled with prudent macroeconomic policies aimed at building up local sources of domestic funding and reducing the use of foreign exchange in the country’s financial system.

The EBRD is considering a new area in its new country strategy. Together with its partners the Bank aims to look at how it can help municipalities in Kyrgyzstan 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 also seek to improve the national energy efficiency legislation, especially, the regulation of energy use in municipal buildings. The Bank will encourage the development of country-wide incentive schemes for energy efficiency and renewable energy promotion.

The EBRD’s commitment to the Kyrgyz Republic is illustrated in the last year’s investments. In 2010 the EBRD signed eight projects worth a total of € 85.9 million (US$ 115.1 million).

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. Some 80 per cent of the projects have been investments into the development of the country’s private sector.