World Bank backs Kyrgyz reforms for energy and sustainable growth

The World Bank has approved $101 million in financing for the First Sustainable and Inclusive Growth Development Policy Operation in the Kyrgyz Republic. It will provide a budgetary support to the government in implementing a broad set of reforms.

As part of its goal to achieve an upper-middle-income status by 2030, the Kyrgyz government is advancing a bold reform agenda to drive socio-economic development. The reforms will be focused on securing a sustainable energy supply, improving the delivery of social services, and strengthening both fiscal sustainability and the overall business climate.

“This Development Policy Operation reflects our strong partnership with the Kyrgyz Republic and our shared goal – to deliver tangible results for people,” said Hugh Riddell, World Bank Group Country Manager for the Kyrgyz Republic. 

“As the country advances with the landmark Kambarata-1 Hydropower Project, the reforms supported by this operation will help create jobs, build skills, and establish the right conditions to ensure the project delivers lasting and inclusive benefits for all,” he concluded.

The World Bank financing will support the Kyrgyz government’s reforms across three main areas:

Energy Sector: The reforms seek to modernize the energy sector, expand access, and support broader economic transformation. Key measures include revising electricity and heating rates while safeguarding vulnerable households, increasing transparency, and attracting private investment in renewable energy.

Social Services and Resilience: The reforms aim to ensure that economic growth benefits vulnerable populations. The focus will be on improving education outcomes, scaling up targeted social programs, and modernizing water infrastructure while addressing regional disparities and promoting equitable access to services.

Fiscal Sustainability and Business Environment: The reforms aim to strengthen fiscal stability and create a more favourable environment for private investment. Measures include modernizing key legislation to enhance transparency, competition, and investor confidence.

The First Sustainable and Inclusive Growth Development Policy Operation is financed through the International Development Association (IDA), the World Bank Group’s concessional lending arm. The funding package consists of a $68 million zero-interest credit, to be repaid over 50 years, and a $33million zero-interest, shorter-maturity loan with a 12-year repayment term and a 6-year grace period during which no repayments are required.

This combination of highly concessional and low-cost financing aims to provide the Kyrgyz Republic with affordable and sustainable financial support for its development priorities.

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