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	USAID Information: USAID Country Page More Stories from Kyrgyzstan FY 2004 Congressional Budget Justification (PDF) Selected USAID Reports External Links: U.S. State Department Background Notes CIA World Factbook United Nations Development Programme World Bank Group
	Statement of the Administrator Summary of FY 2006 Budget Request Program Highlights Management Improvements USAID Support Budget Operating Expenses Capital Investment Fund Working Capital Fund Operating Expenses, Inspector General Foreign Service Retirement and Disability Fund International Disaster and Famine Assistance Transition Initiatives
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Kyrgyzstan

The CBJ Profile Program Summary Tables Complete USAID/ Kyrgyzstan Program Please note: All linked documents are in PDF format Objective SO Number FY 2004 FY 2005 FY 2006 Small and Medium Enterprises 116-0131 12,528 10,300 9,870 Energy and Water 116-0161 1,810 1,500 1,630 Democratic Culture and Institutions 116-0211 6,437 5,400 5,170 Conflict Prevention 116-0240 640 1,210 950 Health and Population 116-0320 5,312 3,900 3,730 Strengthened Basic Education Sector 116-0340 155 120 120 Cross-Cutting Programs 116-0420 2,265 1,540 1,520 Transfers   7,091 7,030 7,010 Total (in thousands of dollars) 36,238 31,000 30,000

The Development Challenge: With both Parliamentary and Presidential elections scheduled for 2005, the primary development challenge in Kyrgyzstan remains to discern and support those seeking a true democracy and an open, market oriented economy. Small, landlocked, and with limited natural resources, Kyrgyzstan is still the most progressive country in Central Asia, with a more free press and open civil society. While very poor, it at least is holding its own economically, with gross domestic product (GDP) growth for 2004 estimated at 6.8%. High debt levels and inadequately maintained infrastructure, however, make this growth fragile. Kyrgyzstan leads the region in both local government and health care reform. Civil society and media are, at times, able to influence government policy and legislation. Parliament is increasingly active and responsive and often provides a check on the Executive Branch, although this could change after 2005 parliamentary elections. The budget process is one of the most transparent in the region. The collected national budget in 2004 was 100% of the planned figure, the best performance since independence. Kyrgyzstan is the only country in Central Asia in which a majority of local government officials is elected, and more than 40% of incumbents were ousted in 2001 local elections. Nevertheless, corruption, stemming in part from very low government salaries (many below the poverty line) and a powerful ruling oligarchy has become a primary concern of donors. Poverty-level wages and deteriorating infrastructure in the education sector are jeopardizing an entire generation. The Government's control of important media, and its harassment of critics, is generating increasing cynicism. Essential social services are still inadequate, but growth was such that from 2002 to 2003 poverty fell from 44% to 41% of the population. Extreme poverty fell from 14% to 9% over the same period. About 12% of the rural population is in extreme poverty, compared to only 5% of the urban population. Hard independent data on poverty levels, however, is outdated. Kyrgyzstan will have a busy elections cycle in 2005, with parliamentary elections in February, presidential elections in October, and elections of heads of local governments in December. Parliamentary elections are expected to be hotly contested. President Akayev has publicly declared that he will not run for office again, perhaps setting the stage for the first democratic transition of power in Central Asia.

Government data show that annual per capita income for 2003 was $367. The average monthly salary was equivalent to approximately $50, an increase from last year's monthly rate of $40. There was a slight increase in the volume of exports to $523 million, but imports grew by 25.6%. External debt was $1.9 billion at the end of the first quarter of 2003, a 7.8% increase over the same time in 2002. Tax collections increased by about 11.8% and inflation is projected to be 4.5% for the year. The currency has remained stable against the dollar at 42-43 soums to the dollar. Trade barriers such as the border closure with Uzbekistan, protectionist measures from Kazakhstan, and corruption continue to be formidable. Many lucrative businesses and investment projects have been monopolized by a small group of politically well-connected entrepreneurs. A maze of uncodified "fees" continues to constrain free enterprise. Banking deposits increased by 32% in 2003 and the average interest rate on loans decreased to approximately 25% per annum. Foreign Reserves were approximately $180 million on October 1, 2003. Although many laws promoting free enterprise activity have been passed, implementation of these reforms has stalled due to a lack of demand on the part of the private sector.

Kyrgyzstan is a firm U.S. ally in the Global War on Terror, and its support in the form of the vital coalition airbase in Manas and over-flight rights were essential to successes in Afghanistan. Kyrgyzstan's reform agenda directly advances U.S. national interests in ensuring stability by promoting economic and democratic reform. Its location at the headwaters of major river systems in Central Asia also enables it to affect critical issues such as irrigated agriculture, power generation, and flooding in the downstream countries. The challenges described above and protectionist measures from neighbors are potential sources of conflict that could threaten regional stability and U.S. economic and political interests in Central Asia.

The USAID Program: The U.S. assistance program in Kyrgyzstan advances U.S. national interests by strengthening democratic culture, reducing potential for conflict, fostering an environment that better supports private sector economic development, delivering higher quality primary health care to more people, supporting anti-trafficking programs, improving basic primary education, and promoting rational and effective management of water and energy. These mutually reinforcing objectives help to establish the environment necessary for both democracy and markets to flourish, thereby promoting internal stability and greater prosperity. USAID programs build on Kyrgyzstan's relatively open civil society and governmental reforms to meet the challenges of continuing oligarchy, corruption, debt burden, lack of trade, broad poverty, and weak governance. USAID is helping to promote the Clean Energy and Water for the Poor Presidential Initiatives through innovative natural resource management programs. These programs have resulted in electricity loss reduction and development of water users associations, as well as assistance in transboundary water management. The Mission also funds a Development Credit Authority (DCA) in Kyrgyzstan, aimed at rehabilitating rural water infrastructure.

All of the programs work directly through private firms or NGOs, both U.S. and local; no funds are given directly to the Government. Many of the programs, however, provide technical assistance to Government Ministries and agencies involved in reforms. Technical assistance is also given to the Parliament to improve the hearing and law making process. Human capacity building is a key component of all programs, since the Government has suffered a steady brain drain to the private sector since independence in 1991.

USAID's seven strategic objectives promote reforms that foster the growth of small and medium enterprises, promote democracy and civil society, improve primary health care and prevent infectious disease, encourage better use of the region's water and energy resources, increase access to basic education, mitigate resource-based or inter-ethnic conflict, and address cross-cutting issues such as gender, corruption, rule of law, and youth.

Other Program Elements: The Farmer-to-Farmer Program, managed by USAID's Bureau for Democracy, Conflict and Humanitarian Assistance, is active in Kyrgyzstan. The Eurasia Foundation has a small grants program, which complements USAID assistance related to education, media, small business, local government, and civil society. Centrally-funded activities include applied research in health and efforts to improve maternal and child health. The State Department's Bureau for International Narcotics and Law Enforcement Affairs and Bureau of Democracy, Human Rights, and Labor continue to collaborate closely with USAID in areas of mutual interest. The Departments of Commerce, Defense, and State also manage programs complementary to USAID field activities in various sectors. USAID also coordinates a very large program of donated humanitarian commodities, transported with State Department funding. Additionally, USAID supports the American University of Central Asia with both State Department and USAID/Washington funding.

Other Donors: Most major multinational donors are active in Kyrgyzstan, as well as bilateral donors such as the European Union, Great Britain, Germany, Switzerland, and Japan. The World Bank leads the donor coordination efforts in the country. USAID collaborates in all areas, but most significant are the joint efforts in health reform, HIV/AIDS, and policy discussions on governance issues. The largest donors are the Asian Development Bank (ADB), the International Monetary Fund (IMF), and the World Bank. Also important are the European Bank for Reconstruction and Development; Organization for Security and Cooperation in Europe (OSCE); World Health Organization; the Global Fund to Fight AIDS, Tuberculosis, and Malaria (GFATM); the International Organization for Migration; the Islamic Development Bank; the Aga Kahn Foundation; and the Open Society Institute. In the education sector, the ADB is the largest donor, followed by the World Bank. The ADB is involved in curriculum reform, textbook development, infrastructure repair, and development of distance education for teachers. The World Bank primarily supports the development of rural education. In the democracy and media sector, other key donors are the OSCE, Soros Foundation, the United Nations, and the European Union. In the health sector, the World Health Organization, GFATM, the World Bank, and ADB are the primary donors. USAID helps to leverage World Bank activities by providing technical assistance for the implementation of World Bank-funded commodities. In the area of economic development, the World Bank, IMF, ADB, and European Union are the largest donors. In the energy sector, the World Bank and Swiss Government are active players, both funding electricity loss reduction projects developed from the USAID-sponsored model. USAID makes unique contributions in terms of financing university business education, investment climate improvement, land reform, and development of the agricultural supply market.

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