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I. INTRODUCTION
1.1. Need for Country Development Strategy
- The Country Development Strategy (CDS) is a very important concept document that outlines a medium-term vision for the Kyrgyz Republic, determining the major directions of development activities for 2007-2010. The overall goal of the CDS is to improve the level and quality of people’s life by ensuring sustainable economic growth, creating opportunities for employment and earning high and sustainable incomes, and improving access to a wide range of social services to achieve high living standards in a sustainable environment.
- The need to prepare and obtain approval of this new medium-term vision of Kyrgyzstan’s development is based first on the socio-economic and political changes and reforms that we have experienced recently. Following the events March 24, 2005, the Kyrgyz population views the new government as the embodiment of its hopes and expectations, opportunities and prospects for the country’s development. In addition, the need for this document is linked to the completion of the first National Poverty Reduction Strategy (NPRS-1), 2003-2005.
- During NPRS-1 implementation, several reforms have been undertaken. They have ensured macroeconomic stability; average annual economic growth of 5%; increases in real incomes of the people; and, improved health and education services according to a number of indicators—all of which reduced the poverty level from 52% to 44%.
- However, the events of 2005 also revealed gaps and shortcomings that have been accumulating for years, of which the major ones include: a weak political system; growing corruption in government institutions and a lack of transparency in making strategic decisions for the country; and, setbacks in equality and in the status of women, children, disabled citizens and other vulnerable groups. Weak and inefficient public administration has slowed economic growth and resulted in an unfair distribution of its benefits.
- Economic growth is improving yet is far from being fully sustainable and strong. The privatization of strategic enterprises is still underway. Energy reform policy has been ineffective. Kyrgyzstan’s investment climate is inefficient and unpredictable. Almost all sectors of the economy operate in the shadow.
- Earlier key sources of economic growth have recently started losing their significance—for example, gold deposits at Kumtor are being depleted, and agriculture is facing a serious production crisis. Therefore, it is crucial for Kyrgyzstan to diversify its economy to ensure its long-term sustainability.
- Despite a reduction in the overall poverty level, the living standards of most of the population remain low. This problem is especially visible in the countryside and remote mountainous regions where over half of the people do not have access to basic public goods, including housing. Large scale and increasing labor migration is evidence of the high level of unemployment. As in the past, the country’s ability to supporting social sector reforms will depend mainly on funding from international financial institutions.
- Therefore, there is a clear need for preparation and implementation of a new and effective CDS that aims to overcome obstacles in the current situation. The CDS’ paradigm implies the need to move towards increased employment of domestic resources and enhancement of the country’s competitiveness. Planned reforms cover a broad range of issues in four major areas: (i) accelerating economic growth, (ii) combating corruption, (iii) human and social development, and (iv) environmental sustainability.
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