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$300 million from ADB: What Kyrgyzstan’s authorities plan to spend the money on

The 57th Annual Meeting of the Asian Development Bank (ADB) was held in Tbilisi, Georgia. Kyrgyzstan was represented by a delegation of the Ministry of Finance. The negotiations were quite successful.

Kyrgyzstan and ADB are going to sign an agreement for up to $300 million this year.

Correspondent of 24.kg news agency on the sidelines of the ADB event talked to Deputy Finance Minister Ernst Kaldybaev, who told why the country needs these projects and who will finance Kambar-Ata 1.

— How is cooperation between Kyrgyzstan and the Asian Development Bank developing?

— The year 2024 is a special year for us. We are celebrating 30 years of cooperation with ADB. During this time, more than 80 agreements in all sectors of the Kyrgyz economy have been signed.

Today, 15 projects for $700 million are being implemented in the fields of energy, roads, education, and healthcare.

Kyrgyzstan has also changed during this time. According to the results of 2023, the economic growth amounted to 6.2 percent, and inflation was kept at 7.3 percent. Over the past three years, the consolidated budget has doubled. We managed to achieve good results in tax collection. The 2023 budget has been overfulfilled, we managed to consolidate 577 billion soms. For this year, we set the budget parameters at 602 billion soms, it was approved with a surplus of 10.9 billion soms.

— But we still ask for new loans and budget support. Somehow it doesn’t work out...

— High economic indicators have been ensured through digitalization and fiscalization, improved administration of revenue-generating areas and management of state finances. This made it possible to start implementing large, strategically important national projects. Work has now begun on the construction of Kambarata hydroelectric power plant and China — Kyrgyzstan — Uzbekistan railway, and the security of the state has been significantly strengthened.

The ongoing reforms require financial resources to carry out the work. Therefore, we are requesting these sums from donors.

Ernst Kaldybaev

Money is needed to support priority areas: solving problems in housing construction, improving the environment, transport and road infrastructure, irrigation, and providing the population with water. We are negotiating with the ADB to increase our resources on these main parameters.

— This year you plan to sign an agreement with ADB for up to $300 million. What will the funds be used for?

— The announced amount is under preliminary consideration with ADB. The money is planned to be allocated for five components:

  • Ecological management of Issyk-Kul lake for sustainable tourism development — $56 million;
  • Increasing sustainability of fiscal policy (housing program within the framework of state mortgage program) — $50 million;
  • Rehabilitation of Issyk-Kul ring road (Barskoon — Karakol section) — $109.5 million;
  • Additional financing of «Rural Water Supply Development Program in Naryn region» covering 19 villages — $30 million;
  • Project to modernize border crossing points with Kazakhstan in Talas, Chui and Issyk-Kul regions, including the construction of modern laboratories — $30 million.

— On what terms will Kyrgyzstan receive $300 million?

— The terms will still be discussed. Both credit and grant support is envisaged. But we must understand that Kyrgyzstan is moving into the category of countries with sustainable development. This means that the republic will receive fewer and fewer grants from about 2025-2026.

— Kyrgyzstan has also requested budget support of $50 million. Why if the budget is in surplus?

— The issue of budget support has been worked out earlier, and there is preliminary approval. The money will be used to improve housing construction and state mortgage programs. Today we are attracting funds from different sources — the Islamic Development Bank, Arab funds — to solve these issues. We also plan to use the ADB budget support for this purpose.

— Is the participation of the Asian Development Bank in the project on construction of Kambarata HPP 1 discussed?

— Of course. Negotiations are underway on this issue. Perhaps, we will agree on financing for 2025. Now the Ministry of Finance is making every effort to find finance for the project. An international forum to support the project will be held in Austria in June. Many international donors are ready to participate in financing.

The main negotiations will take place in Vienna, and the amounts to be allocated will be determined later.

As of today, the Ministry of Energy has a preliminary updated feasibility study for the project. Work on the final feasibility study is progressing in parallel with the search for financing sources. We do not want it to turn out like the representatives of Tajikistan told us: while they were drawing up the feasibility study for Rogun HPP and collecting documents, the project tripled in price. We want to avoid such mistakes. We need a lot of money, the project is serious, so financing issues must be solved first and foremost.