The FINANCIAL — The Asian Development Bank’s (ADB) Board of Directors has approved a $25 million policy-based grant to continue ongoing efforts to improve the investment climate in the Kyrgyz Republic and encourage the private sector to contribute more effectively to the country’s growth.
The grant is being provided under subprogram 3 of the Second Investment Climate Improvement Program (Second ICIP).
“The private sector has a significant role to play in boosting the Kyrgyz economy through diversified economic growth and higher value-added job creation,” said Priyanka Sood, Senior Financial Sector Specialist at ADB. “ADB’s grant will increase access to financial services for small businesses, improve prospects for private sector participation in developing infrastructure including through public-private partnerships (PPPs), diversify trade and investment, and increase transparency and ease of doing business. Together, these actions will make the country a more attractive place for investment and job creation.”
Small and medium-sized enterprises (SMEs) are one of the biggest contributors to the Kyrgyz economy, comprising about 40% of the country’s gross domestic product and almost 20% of total employment. Subprogram 3 will help increase access to finance by reducing the risks of lending to SMEs including through operationalization of the State Guarantee Fund, while also expanding financial services among the underbanked segment of the population by expanding the use of mobile and internet payments for key public services. It will also support government efforts to further develop the country’s PPP program. The first PPP agreement was signed in August 2017 for the provision of hemodialysis services in Bishkek, Osh, and Jalalabad, according to ADB.
Additionally, subprogram 3 has provided support for the government’s efforts to diversify trade and investment destinations and sources. It will also help increase transparency and improve the ease of doing business in the country to incentivize private businesses to join the formal economy and encourage more private sector players—domestic and international—to do business in the Kyrgyz Republic.
These outputs build on ADB-supported reforms in 2015 and 2016 implemented under subprograms 1 and 2, which totaled over $65 million.