Resource information
The Kyrgyz Republic suffered severe
shocks during the early years of independence, loosing its
traditional markets in the Former Soviet Union republics, as
well as substantial transfers and subsidies from the Soviet
Union, that included a falling GDP during the first five
years of transition. These circumstances prompted the Kyrgyz
Republic to adopt a wide range of reforms to accelerate the
transition to a market economy, emphasizing price and trade
liberalization, and the shift of ownership of state assets
to the private sector, including land, and most state-owned
enterprises (SOEs). Since the mid-l990s, the economy has
shown steady signs of recovery. Despite these favorable
developments, the Kyrgyz Republic remains the second poorest
of the FSU republics, and one of the poorest countries in
the world. Absolute poverty affected about half of the
population in spite of progress made in 2001, and, although
poverty is highest in rural areas, there are large regional
disparities, where transient poverty is high as a result of
high consumption volatility. Access to public services such
as water and sewerage, electricity, district heating, and
telecommunication services, is very low. This Public
Expenditure Review (PER) has sought to provide a strategic
framework for fiscal adjustment and public expenditure
reform, consistent with the government's objectives for
accelerated growth and poverty reduction. The broad contours
o f the strategy are: To stabilize the government's
finances through stronger revenue, and expenditure
management instruments and institutions, as well as through
debt relief; to re-align sector policies with the most
essential country priorities, with a general thrust toward
improving targeted, and efficient use of resources in both
social and public infrastructure sectors; to revamp the
public administration to improve policy implementation and
service delivery; and, to secure external financial support.
Given the fragile external debt situation and the extent of
poverty, priority has to be given to fiscal adjustment and
the expenditure reform agenda. Government performance needs
to be monitored, particularly at the grass roots levels,
through systematic diagnoses of institutional problems, and
through quantitative performance indicators, to monitor
progress and competition in public service delivery.
