Kyrgyz Republic Country Update #5
June 2008
4 June 2008
Recent developments, decisions, and civil society activities related to activities of the International Financial Institutions (IFIs) in the Kyrgyz Republic.
Kyrgyz Republic Country Updates provide information about recent developments, decisions, and civil society activities related to International Financial Institution (IFI) involvement in the Kyrgyz Republic including that of the World Bank (WB), International Finance Corporation (IFC), International Monetary Fund (IMF), European Bank for Reconstruction and Development (EBRD) and the Asian Development Bank (ADB). If you would like to be included in or removed from the distribution list, please e-mail the moderator, George Holliday, at gholliday@bicusa.org. Correspondence with BIC may be conducted in Russian.
The Bank Information Center (BIC) partners with civil society in developing and transition countries to influence the World Bank and other international financial institutions (IFIs) to promote social and economic justice and ecological sustainability. BIC is an independent, non-profit, non-governmental organization that advocates for the protection of rights, participation, transparency, and public accountability in the governance and operations of the World Bank, regional development banks, and IMF. For more information about BIC, see www.bicusa.org.
Sections:
I. IFI Project Activities
II. Extractive Industry Transparency Issues
III. Civil Society Activities
IV. IFI Consultations and Policy Updates
V. Other Notable Developments
IFC Activities
May 21, 2008: The International Finance Corporation disclosed an Environmental and Social Review Summary for Altyn-Ajydar, a Kyrgyz-Chinese joint venture in cardboard packaging. The company has received IFC loans since 1995 and seeks an additional $1.5 million to assist its $3 million construction materials production project. Further information and contacts for Altyn-Ajydar, as well as where to obtain the Environmental Action Plan, can be found at the following link:
Altyn-Ajydar (IFC website)
World Bank Activities
April 29, 2008: The World Bank approved a $23.8 million project to assist agricultural development in the Kyrgyz Republic, focusing on livestock. The Environmental Assessment Reports and other documents can be obtained at the link below:
Agricultural Investments (WB website)
March 18, 2008: The World Bank also sanctioned a $14.35 million project aimed at improving living conditions in settlements in Osh and Bishkek by providing basic infrastructure, such as roads and water.
Urban Infrastructure Project (WB website)
International Monetary Fund Activities
May 22, 2008: The IMF completed its Sixth Review and increased the Kyrgyz Poverty Reduction and Growth Facility (PRGF) from the original $14.4 million agreement to $28.8 million. It also approved a $16.5 million disbursement to alleviate the problems associated with rising food and fuel costs.
PRGF Increase (IMF website)
EBRD Activities
April 24, 2008: The EBRD invested in a 34% stake of Siut Bulak, a dairy producer, to aid in the company’s expansion in the Tiup Region.
Dairy Investment (EBRD website)
February 27, 2008: The EBRD has committed technical funds to continue its support of the Telecom sector.
Telecom (EBRD website)
December 26, 2007: The EBRD agreed to loan Demir Kyrgyz International Bank, in which EBRD holds a 15% stake, $3 million for company loans in the country.
Corporate Loans (EBRD website)
December 3, 2007: The European Bank for Reconstruction and Development approved a $40 million loan for the Kyrgyz Financial Sector Framework (KFSF) project, which seeks to increase the scope of funding available in the Kyrgyz Republic and provide discipline to the financial sector.
KFSF (EBRD website)
ABD Activities
March 26, 2008: ADB proposed technical assistance for the Agricultural Land Improvement Project to increase agricultural output and profitability. The TA implementation is estimated at $700,000.
Agricultural Land Improvement Project (ADB website)
March 11, 2008: ADB released a $500,000 policy for development and technical assistance project to improve the investment climate through adequate legislature, training, and promotion of best business practices.
Investment Climate Improvement Program (ADB website)
December 2007: The Asian Development Bank issued a project document on the Southern Agriculture Area Development Project. The total cost is estimated at $31.2 million, of which ADB will provide a $15 million loan and $5 million grant to help the agricultural sector in Batken, Jalalabad, and Osh.
Agriculture Project (ABD website, Acrobat pdf)
December 19, 2007: The Asian Development Bank awarded a $3 million grant to boost trade within the Central Asia Regional Economic Cooperation (CAREC), of which Kazakhstan, Azerbaijan, China, Kyrgyz Republic, Mongolia, Tajikistan, Uzbekistan, and Afghanistan are members.
Trade in Central Asia (ADB website)
Overview
The Extractive Industries Transparency Initiative (EITI) was begun in 2002 by UK Prime Minister Tony Blair. It aims to improve openness and transparency in company payments and in government revenues from extractive industries. An independent auditor reconciles payments from companies with revenues received by the government.
EITI Progress
The Kyrgyz Republic joined EITI in June of 2004 with the support of the World Bank and the United Kingdom’s Department for International Development. Unlike Kazakhstan and Azerbaijan, EITI in the Kyrgyz Republic focuses on the mining sector, rather than oil and gas development. Soon after endorsing EITI, the Kyrgyz Republic published its first EITI report in October of 2004. Reports are published every six months. The Kyrgyz Republic also formed an EITI Implementation Committee and Advisory Council, composed of representatives from civil society and international organizations, including the World Bank and IMF, government, and industry. The Kyrgyz Republic is a candidate country and must complete validation by 2010.
Civil society organizations in the Kyrgyz Republic have actively supported EITI. The Bureau on Human Rights and Rule of Law, Civil Society Against Corruption, “Tree of Life” Human Development Centre, and the Kyrgyz Committee for Human Rights have joined the international campaign, Publish What You Pay.
For more information, see the links below:
Revenue Watch Institute website
EITI website
Publish What You Pay website
IFI Involvement
- World Bank support of EITI includes administration of the EITI Multi-Donor Trust Fund and assistance to civil society groups and the EITI Secretariat.
- On April 12, 2008, the World Bank announced an Extractive Industries Transparency Initiative Plus Plus (EITI++) project, which offers governments additional options and technical aid for improving revenue management. Civil society groups, such as Publish What You Pay, have endorsed the project. EITI Plus Plus (WB website)
- As of January 2007, all investors supported by the International Finance Corporation must publish their payments to the government. The IFC will evaluate investor compliance in the first half of 2008. Implementation of the Management Response to the Extractive Industries Review, World Bank, February 2008 (WB website, Acrobat pdf)
- The European Bank for Reconstruction and Development (EBRD) has pledged support for EITI through active involvement in EITI consultation, promotion of transparency in revenue reporting and within the financial sector, and capacity-building aid for countries implementing EITI principles. EBRD EITI Policy (EBRD website)
- In February of 2008, the Asian Development Bank officially endorsed EITI. ADB Endorses EITI (ADB website)
Problem Areas
- Information on the Kyrgyz Republic’s progress in EITI is limited.
- Improved access to information for citizens and organizations is needed for EITI to be effective.
Resources
Kyrgyz Republic’s EITI Bulletin, Kyrgyz Republic, 2004 (WB website, Acrobat pdf)
Drilling Down: The Civil Society Guide to Extractive Industry Revenues and the EITI, Revenue Watch Institute, May 2008 (RWI website)
Implementation of the Management Response to the Extractive Industries Review, World Bank, February 2008 (WB website, Acrobat pdf)
Eye on EITI: Civil Society Perspectives and Recommendations on the Extractive Industries Transparency Initiative, Publish What You Pay and Revenue Watch Institute, 2006 (EITI website, Acrobat pdf)
EIB Civil Society Workshop
On June 30, 2008, the European Investment Bank will hold a workshop for civil society organizations in Brussels, Belgium. The workshop will be in English and French and include observers from other international finance organizations. For more information and to request an invitation, visit the link below:
EIB Civil Society Workshop (EIB website)
IMF and WB Seek Civil Society Input
On May 23, 2008, IMF Director Strauss-Kahn and World Bank President Zoellick held a video conference in Washington, DC to gain civil society perspectives on the global food crisis. The Kyrgyz Republic is one of four low-income countries to receive substantial extra assistance in light of rising food prices.
IMF and Civil Society (IMF website)
Support for Food Aid (IMF website)
Extended Consultation on EIB’s Environmental and Social Statement
The European Investment Bank has extended the public consultation period for its Environmental and Social Statement until June 20, 2008. A consultation meeting will be held in Warsaw on June 12. With sufficient stakeholder interest, the Bank intends to hold the second round of consultation between September 1 and 28 to seek input on the second draft revised Statement on Environmental and Social Principles and Standards. Submission details and the statement draft can be found at the links below.
Comment Submission Details (EIB website)
EIB Environmental and Social Statement (EIB website, Acrobat pdf)
Public Consultation on EIB's Environmental and Social Statement (EIB website)
EBRD Environmental and Social Policy
On May 12, 2008, the Board of Directors of the European Bank for Reconstruction and Development (EBRD) approved the Bank's new Environmental and Social Policy as well as a new Public Information Policy, one week before the EBRD's Annual Meetings in Kiev, Ukraine.
EBRD 2008 Environmental and Social Policy, May 12, 2008 (EBRD website, Acrobat pdf)
BIC comments on the draft EBRD Environmental and Social Policy, April 8, 2008 (BIC website)
EBRD Public Information Policy
The new Public Information Policy was approved on May 12, 2008, bringing some positive improvements to the previous policy. Civil Society comments on the initial discussion paper called for more transparent and amenable public consultation and disclosure provisions, an independent appeal system, and more timely and automatic disclosure of project impact information. Concerns were also expressed at the disclosure exceptions.
EBRD 2008 Public Information Policy, May 12, 2009 (EBRD website, Acrobat pdf)
Global Transparency Initiative and CEE Bankwatch Network comments on EBRD PIP, December 26, 2007 (GTI website, Acrobat pdf)
Independent Recourse Mechanism Review
EBRD is currently reviewing its complaint review system, the Independent Recourse Mechanism (IRM). It is also expected that a revised version of the IRM policy will be made public late 2008 for an additional round of public comment period that will last through January 2009.
EB Independent Recourse Mechanism (EBRD website, Acrobat pdf)
Study: Weak EBRD complaints mechanism (CEE Bankwatch study)
World Bank Consultations
The World Bank Group is seeking comments on its strategic priorities for civil society engagement. The process will take place from March until July of 2008. Additionally, the bank is drafting an issues paper on Climate Change, which is currently available for comment and will be discussed at the 2008 Annual Meetings. Details can be found here:
Strategic Priorities Framework for Bank – Civil Society Relations (WB website)
Climate Change Global Consultation page (WB website)
IMF Publishes New Kyrgyz Country Update
On June 4, 2008, the International Monetary Fund released a new country report for the Kyrgyz Republic, assessing the Poverty Growth and Reduction Facility.
Kyrgyz Republic Country Report (IMF website, Acrobat pdf 597 KB)
World Bank and IMF Spring 2008 Meetings Summary
The World Bank and IMF Spring Meetings addressed climate change, rising food and commodity prices, and the global credit crisis. Civil society meetings examined revenue transparency in extractive industries, anti-corruption measures, IMF conditionalities, and a variety of other issues. For summaries of official WB/IMF meetings as well as civil society strategy meetings, see the links below:
Bretton Woods Project (BWP website)
IMF and World Bank - Spring Meetings 2008 (IMF website)
WB and IMF: Revenue and Contract Transparency Assessment
Global Witness and Bank Information Center are conducting an assessment of revenue and contract/licensing transparency implementation in extractive industry operations by the World Bank, IFC and IMF. Preliminary findings of the assessment across 15 resource rich countries revealed that revenue transparency is inconsistent across countries and programs of these institutions. Both civil society involvement and contract transparency were rarely mentioned in institutions’ project/country documents and were only once used as progress indicator upon which further funding was tied. GW and BIC plan to release the final assessment during summer 2008.
New World Bank Website Publishes Company Payments
The World Bank launched a webpage, where IFC clients publish their payment to their host governments starting with operations in 2007. The webpage provides figures for companies that already disclosed payment figures and those planning to do so during June 2008, as well as projects that do not involve payments to the government.
IFC Extractive Industry Clients Government Payment Disclosure (WB website)
Independent Evaluation Office (IEO) Report
The International Monetary Fund leadership has commented on the IEO report of 2008. The report examines IMF governance structures, accountability, and stakeholder involvement. The comments and report can be found at the link below:
IEO Report and the IMF (IMF website)
EBRD 2008 Annual Meetings and Business Forum
Over 2,000 government, civil society, and business actors met in Kiev, Ukraine on May 18-19, 2008, for the EBRD’s Annual Meeting. Civil society groups were critical of the bank’s support of problem projects, such as Arcelor Mittal and Bautino II in Kazakhstan, and of new policies drafted without adequate commentary from civil society. These policies, energy efficiency, and banking systems formed some of the topics of discussion. More information on the meetings and civil society responses can be found at the following links:
2008 Annual Meetings (EBRD website)
Blogs and 2008 Annual Meetings News (IFIwatchnet website)
Comments on New EBRD Policies (BIC website)
EBRD's Annual Meeting (BIC website)
Asian Development Bank 2008 Annual Meetings
At the 2008 Annual Meeting in Madrid, Spain, on May 6-7, 2008, rising food costs were a major area of concern. The ADB committed $500 million to address the problem immediately and $2 billion for agricultural support in the coming year. The ADB also launched its Strategy 2020, which will help shape ADB activity in the future. Some civil society actors have objected to the strategy. Further news articles, summaries, and useful documents can be found at these sites:
Annual Meeting News and 2008 News (ADB website)
2008 ADB Annual Meeting and Civil Society Criticisms (BIC website)
NGOs Boycott ADB Consultations, ADB Agrees to Second Draft
Several members of the NGO Forum Network did not attend the Asian Development Bank’s April roundtable consultations, citing the draft Safeguard Policy Statement’s failure to comply with basic objectives. After U.S. and NGO pressure, the ADB agreed in May to release another draft and consultation.
ADB Consultations Boycotted (BIC website)
ADB Agrees to Second Draft (BIC website)