COUNTRY DEVELOPMENT STRATEGY for 2007-2010 Presentation by Akylbek Japarov Minister of Finance of the Kyrgyz Republic

CDS DEVELOPMENT PROCESS Order of the President of the Kyrgyz Republic Working group Ministries and Agencies Regional representatives Jogorku Kenesh Experts Civil society Private sector Development partners

NPRS RESULTS and ACHIEVEMENTS STRUCTURAL INDICATORS QUANTITATIVE INDICATORS Efforts to align policy measures of strategy with budget sources Average annual economic growth level - 5% Initiation of process on development of sectoral strategies and sector budgets based on programmatic approach Decrease in poverty level from 52% to 44% Mobilization of local communities in seeking resources to improve quality of life Increase of pension and social package sizes Donors community / Government Constructive partnership

Why the implementation of NPRS was not fully successful? Comprehensiveness of the document Wide range of priorities Lack of financing (Financing gap) decreased the effectiveness of program implementation in general Inconsistency between goals, policy measures and financing the activities to achieve these goals Monitoring System shortcomings Complexity of measuring the impact of various policy measures on development process (qualitative changes) and aligning with necessary funding amount Lack of political will

NPRS CDS CONCEPTUAL DIFFERENCES Manufacturing Social economy economy Production of commodity goods Выпуск товаров потребления Production of commodity goods Production of capital goods Production of capital goods

RELEVANCE OF CDS Completion of NPRS 2003-2005 A need to develop a new effective country development strategy, based on own capacity Coordination and consistency of policy

CDS SPECIFIC FEATURES and DISTINCTIONS 1. MARKET ORIENTED 2. IMPROVED PRIORITIZATION 3. IMPORTANT ROLE OF REGIONS (Oblasts ) IN DEVELOPMENT 4. FOCUS ON LOCAL CAPACITY 5. ALIGNMENT OF CDS GOALS WITH OTHER INITIATIVES

VISION AND GOAL IMPROVING QUALITY OF LIFE OF CITIZENS OF THE KYRGYZ REPUBLIC THROUGH EFFECTIVE ECONOMIC GROWTH NOT LESS THAN 8% PER YEAR

IMPROVING DEVELOPMENT ENVIRONMENT Social and political stability Macroeconomic policy Strategy on public debt management Investment policy and investment climate Development of financial sector Fiscal reform Support and stimulation of export Policy on achieving gender equality

STRATEGIC DIRECTION INCREASE OF ECONOMIC CAPACITY (9 priorities) FIGHTING CORRUPTION (5 priorities) HUMAN AND SOCIAL DEVELOPMENT (5 priorities) ENSURING ENVIRONMENTAL SUSTAINABILITY (2 priorities)

CRITERIA FOR SELECTION OF PRIORITIES Level of value added cost to GDP Tax revenue increase Job creation Multiplicative effect Competitiveness

FIRST DIRECTION ENERGY MINING AGRICULTURE AND AGRO-PROCESSING SMALL AND MEDIUM ENTERPRISE DEVELOPMENT CONSTRUCTION TOURISM DEVELOPMENT TRANSPORT INFRASTRUCTURE COMMUNICATION AND INFORMATIZATION DEVELOPMENT OF INNOVATIVE TECHNOLOGIES

SECOND DIRECTION POLITICAL REFORM DEREGULATION OF ECONOMY STATE GOVERNANCE REFORM BUILDING CAPACITY JUDICIARY REFORM

THIRD DIRECTION EDUCATION THAT MEETS THE NEEDS OF SOCIETY ACCESSIBLE AND HIGH QUALITY HEALTH CARE LABOR MARKET AND OPTIMIZATION OF MIGRATION PROCESSES INCREASE OF POPULATION PARTICIPATION IN CULTURAL LIFE

FORTH DIRECTION ENSURING ENVIRONMENTAL SAFETY ENSURING COMPLEX SECURITY TO POPULATION AND TERRITORIES FROM NATURAL DISASTERS AND CATASTROPHES

ROLE OF REGIONS ATTACHING SIGNIFICANCE TO DEVELOPMENT OF REGIONS – INVOLVEMENT AND SUPPORT OF NATIONAL PRIORITIES THROUGH IMPLEMENTATION OF SPECIFIC PROGRAMMES AND PROJECTS

PRIORITIES ON DEVELOPMENT OF REGIONS Batken oblast agriculture, processing industry Jalalabad oblast energy, processing industry, tourism, agriculture Issyk-Kul oblast tourism, reconstruction of highway around Issyk-Kul, construction and gold mining Naryn oblast tourism, mining, agriculture Osh oblast Talas oblast gold mining, agriculture, processing industry Chui oblast processing industry, gold mining, agriculture Bishkek city “business tourism”, processing industry, service sphere

MONITORING AND EVALUATION Draft matrix of monitoring indicators have been developed (interim and final) Draft M&E system was discussed with official Government structures Preparation of software system to launch monitoring is being completed Issue on institutionalization of monitoring system has been solved (Ministry of Economic Development and Trade) Reviews and evaluation of capacity of regional structures for establishment of monitoring centers at the oblast level have been carried out

NEXT STEPS Test information monitoring system Train users and suppliers of information Launch CDS monitoring system

Favourable factors revealed in the course of development of indicators Political support at national and regional levels International donor organizations’ interest in project results Government structures’ interest NGOs’ readiness to interact

NEED FOR RESOURCES $ 4.2 billion Option 1 – “Baseline” State Civil sector $ 4.2 billion Private sector $ 1.2 billion Development partners $ 0.5 billion

RESOURCE STRUCTURE Option 1 – “Baseline”

NEED FOR RESOURCES (requirement) Option 2 – “Strategic – CDS reforms” State $ 2.5 billion Civil sector $ 6.3 billion Private sector $ 3.3 billion Development partners $ 0.5 billion

Option 2 – “Strategic – CDS reforms” RESOURCE STRUCTURE Option 2 – “Strategic – CDS reforms”

DEVELOPMENT MACRO INDICATORS 2005 2010 option-1 2010 г. option-2 Real GDP growth -0,2% 5,9% 9,0% GDP per capita 479$ 728$ 872$ Unemployment level (total) 9,7% 5,1% 4,0% Average wage 62,6$ 100$ 160$ Poverty level 43,1% 32,5% 29,8%

GDP

GROSS CAPITAL FORMATION 2.4 times 1,5 times

Price of reforms in the framework of CDS 3.289 billion dollars – 2007-2010 by strategic scenario 1.276 billion dollars – 2007-2010 by baseline scenario 2.1 billion USD

Political will Holistic economic policy Consistency of reforms Participation of all government branches

K. Bakiev’ Address to the nation: Quote from President K. Bakiev’ Address to the nation: “Now it is very important for us together, with general will, to aim on solution of the main issues. We must understand that we can’t rely on foreign aid that someone will come and make our country rich. We lived with such hope for a long period of time, however we gained many debts. We must work ourselves.”

THANK YOU FOR ATTENTION! Presentation by Akylbek Japarov Minister of Finance of the Kyrgyz Republic