This Interim Strategy Note (ISN) covers the period of August 2011 to June 2013 and succeeds the previous CAS, which was presented to the Board in May 2007. The ISN focuses on the country’s recovery and stabilization needs, while paving the way for support for long-term development. The need for an interim strategy approach is underscored by the current fragile political, social and economic situation in the country.
The ISN therefore aims to partner the transition from recovery, via stabilization, to longterm sectoral development. It will do so by supporting not only improved governance, but also the social and economic stabilization that is a prerequisite for sustained governance reforms.
The Kyrgyz Republic– a landlocked mountainous country in Central Asia with a multi-ethnic population of 5.4 million – is one of the poorest countries in the Europe and Central Asia region, with income per head of $8801 in 2010 (Atlas methodology). Since independence in 1991, the country has made a strong advance towards the creation of a liberal market economy with the aim of promoting sustained economic growth and fighting poverty, and has sought international integration through trade and investment, notably through membership of the World Trade Organization (WTO). It has met with some success in fostering open institutions, but has struggled to embed lasting democracy and civic freedom. Economic reforms resulted in an average annual growth of 5.4 percent over the five years to 2009 and a decline in poverty from 40 percent to 32 percent over 2006-9 and extreme poverty from 9 percent to 3 percent over the same period. But improvements in governance have been elusive: the country was ranked 164 out of 178 in Transparency International’s Corruption Perception Index, and Organization for Security and Co-operation in Europe (OSCE) missions characterized elections until 2009 as falling short of international good practice.
The interim government that took office amidst political and social turmoil in early April 2010 declared its intention to concentrate on stability, security, and a transition to a new constitution, with major economic decisions to be left to its elected successor. It quickly reasserted central control over the country, achieved social peace and faced the task of satisfying the high expectations of a liberated population, who demanded high standards in governance and public services. It achieved legitimacy through the successful constitutional referendum of mid-year..
The Foundations of The Interim Assistance Strategy
The ISN is informed by the key insights of the World Development Report on Conflict, Security and Development (2011), and it applies the operational principles that have been developed to shape strategies in countries facing fragility, conflict and violence. It is also guided by the need for continuity in the sector reform processes underway before 2010.
Joint Country Assistance Strategy 2007-2010: Progress and Lessons
The Kyrgyz Republic joined the World Bank Group in 1992. Throughout its membership, it has been an IDA-only country and has received commitments of $974 million covering 47 projects. In the early years of Bank engagement, the portfolio focused on supporting ambitious structural reforms. The record was mixed owing to low government capacity and persistent weak governance. In light of lessons learned, particularly from CAS and Implementation Evaluation Group (IEG) evaluations, projects were re-directed towards poverty-fighting investment operations, whilst the reform agenda, including governance, was pursued through dialogue and technical assistance with increasing coordination with donor partners.
The JCSS is being succeeded by an interim strategy in light of the post-conflict circumstances of the country as provided for under OP/BP 2.30. As discussed in this document, the security conditions in the south continue to be fragile and the short term political and policy outlook is uncertain. In this phase of political transition, any medium or long term economic strategy is subject to significant revision. The technical and policy work for a medium term development strategy has begun, but the final direction will depend upon political direction and prioritization from the government that is expected to take office in early 2012 following the presidential elections.
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