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 Strengthening foreign aid effectiveness in Kyrgyzstan

BISHKEK (TCA) - Last week, Bishkek hosted a forum on enhancing aid effectiveness. An open dialogue between representatives of the Government, civil society, business and international organizations was held.

According to the Economy Minister Temir Sariev, the national budget can provide only 53% of total expenses (791.8 billion soms) to implement the targets identified in the National Sustainable Development Strategy until 2017 (NSDS). To cover the deficit, it is necessary to improve coordination and evaluation of the foreign aid effectiveness, as well as to improve the business environment and investment climate to restrain capital outflows and attract private investment in the economy. 

The international donor community provides substantial assistance to Kyrgyzstan as part of the Joint Country Support Strategy (JCSS), and the priorities of donor assistance strategies correspond to the most important priorities of Kyrgyzstan's development, the minister said. The total external assistance to Kyrgyzstan, under the Government guarantee, as direct public investment including grant and loan components will be $1.347 billion for 2014-2016. 

Since independence, Kyrgyzstan has received donor support from various international financial institutions. The greatest part of the projects financed by external borrowing were socially oriented projects aimed at quality of life improvement including transport infrastructure, access to drinking water, electricity and other services.

The coordination of foreign aid is discussed in terms of planning, distribution, monitoring, and performance evaluation of the projects funded by international financial institutions. Success has not always been evident due to the lack of coordination, ambitious targets, and budget constraints.

Currently, coordination of foreign aid is dispersed among several government institutions including the Ministry of Finance and Ministry of Economy. As a result, there is a discontinuity in the coordination, planning and monitoring of projects, Sariev concluded.

To improve the aid coordination, the minister proposed to harmonize the coordinating functions of state institutions involved in the donor assistance strategies. This means greater involvement of national partners including NGOs, businesses, professional associations and women's organizations. Transparent system of annual reporting and monitoring the donor assistance will also help improve the aid coordination.  

Recently, the ministry has successfully resolved the issue that has not been resolved for several years. This month, a new agency to attract and promote foreign direct investment will begin to operate in Kyrgyzstan, the minister said.

NGO representatives expressed a lot of criticism about funding gender equality commitments. National Coordinator of the UN Project "Women in the Kyrgyz Republic", Anar Musabaeva, believes that the problem of financing gender equality commitments lies in methodological difficulties on differentiation and integration of financial resources allocated for gender development. Moreover, it is difficult to obtain information on this subject.

The analysis of the foreign aid strategies in terms of gender integration showed weak coordination of donor policies and the absence of mandatory accounting and transparency of aid flows in support of gender equality.

The Government and the international community mainly discuss the amount of aid but there are few debates on the quality of foreign aid, said Gulnara Ibraeva, Executive Director of the Innovative Solutions Inc. After the High Level Forum on Aid Effectiveness (HLF-4) held in Busan, Korea, the number of donors supporting Kyrgyzstan's development has increased to 19 and the volume of foreign aid amounted to $523 million. 

Rafkat Hasanov, Deputy Head of the Secretariat of the Business Development and Investment Council, spoke on the role of the business community and effectiveness of aid to the private sector. Declaration of the HLF-4 proclaims that donors will support capacity-building for the private sector development. The document recognizes that the private sector plays a major role in promoting innovation, creating wealth, income and jobs, mobilizing domestic resources and, as a result, contributes to poverty reduction.

There is clearly a gap between demand and supply, and there is a widespread consensus that the private sector has a critical role to play to fill all these gaps. Business is a primary driver of jobs and innovation. The world will achieve sustainable development only if sufficient private investment enables broad-based growth, the HLF-4 concluded. "Businesses can mobilize capital, products and skills, and donor agencies can mobilize knowledge and networks." 

To improve the aid effectiveness, the Bishkek forum participants decided to enhance an open dialogue between the Government, civil society, business and international organizations.

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