Consultative Group Meeting, Bishkek, November, 3 , 2004

1
COUNTRY DEVELOPMENT STRATEGY for 2007-2010
Presentation by Akylbek Japarov Minister of
Finance of the Kyrgyz Republic
2
CDS DEVELOPMENT PROCESS
Order of the President of the Kyrgyz Republic
Working group
Ministries and Agencies
Regional representatives
Jogorku Kenesh
Development partners
Experts
Civil society
Private sector
3
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
4
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

5
CONCEPTUAL DIFFERENCES
Manufacturing economy
Social economy
CDS
NPRS
Production of commodity goods

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Production of commodity goods

Production of capital goods
Production of capital goods
6
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

7
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
8
VISION AND GOAL
IMPROVING QUALITY OF LIFE OF CITIZENS OF THE
KYRGYZ REPUBLIC THROUGH EFFECTIVE ECONOMIC GROWTH
NOT LESS THAN 8 PER YEAR
9
IMPROVING DEVELOPMENT ENVIRONMENT

1. Social and political stability
2. Macroeconomic policy
3. Strategy on public debt management
4. Investment policy and investment climate
5. Development of financial sector
6. Fiscal reform
7. Support and stimulation of export
8. Policy on achieving gender equality

10
STRATEGIC DIRECTION
INCREASE OF ECONOMIC CAPACITY (9
priorities)
FIGHTING CORRUPTION (5 priorities)
HUMAN AND SOCIAL DEVELOPMENT (5
priorities)
ENSURING ENVIRONMENTAL SUSTAINABILITY (2
priorities)
11
CRITERIA FOR SELECTION OF PRIORITIES

• Level of value added cost to GDP

• Tax revenue increase

• Job creation

• Multiplicative effect

• Competitiveness

12
FIRST DIRECTION

1. ENERGY
2. MINING
3. AGRICULTURE AND AGRO-PROCESSING
4. SMALL AND MEDIUM ENTERPRISE DEVELOPMENT
5. CONSTRUCTION
6. TOURISM DEVELOPMENT
7. TRANSPORT INFRASTRUCTURE
8. COMMUNICATION AND INFORMATIZATION
9. DEVELOPMENT OF INNOVATIVE TECHNOLOGIES

13
SECOND DIRECTION

1. POLITICAL REFORM
2. DEREGULATION OF ECONOMY
3. STATE GOVERNANCE REFORM
4. BUILDING CAPACITY
5. JUDICIARY REFORM

14
THIRD DIRECTION

1. EDUCATION THAT MEETS THE NEEDS OF SOCIETY
2. ACCESSIBLE AND HIGH QUALITY HEALTH CARE
3. LABOR MARKET AND OPTIMIZATION OF MIGRATION
   PROCESSES
4. INCREASE OF POPULATION PARTICIPATION IN CULTURAL
   LIFE

15
FORTH DIRECTION

1. ENSURING ENVIRONMENTAL SAFETY
2. ENSURING COMPLEX SECURITY TO POPULATION AND
   TERRITORIES FROM NATURAL DISASTERS AND
   CATASTROPHES

16
ROLE OF REGIONS
ATTACHING SIGNIFICANCE TO DEVELOPMENT OF REGIONS
INVOLVEMENT AND SUPPORT OF NATIONAL PRIORITIES
THROUGH IMPLEMENTATION OF SPECIFIC PROGRAMMES AND
PROJECTS
17
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 agriculture, processing industry
Talas oblast gold mining, agriculture, processing industry
Chui oblast processing industry, gold mining, agriculture
Bishkek city business tourism, processing industry, service sphere
18
MONITORING AND EVALUATION

• Draft matrix of monitoring indicators have been
  developed (interim and final)
• Draft ME 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

19
NEXT STEPS

• Test information monitoring system
• Train users and suppliers of information
• Launch CDS monitoring system

20
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

21
NEED FOR RESOURCES
Option 1 Baseline
State 2.5 billion
Civil sector
4.2 billion
Development partners 0.5 billion
Private sector 1.2 billion
22
RESOURCE STRUCTURE
Option 1 Baseline
23
NEED FOR RESOURCES (requirement)
Option 2 Strategic CDS reforms
State 2.5 billion
Civil sector
6.3 billion
Development partners 0.5 billion
Private sector 3.3 billion
24
RESOURCE STRUCTURE
Option 2 Strategic CDS reforms
25
DEVELOPMENT MACRO INDICATORS
2005 2010 option-1 2010 ?. 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
26
GDP
27
GROSS CAPITAL FORMATION
2.4 times
1,5 times
28
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
29

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

30
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 cant 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.
31
THANK YOU FOR ATTENTION!
Presentation by Akylbek Japarov Minister of
Finance of the Kyrgyz Republic