Kyrgyzstan Secures World Bank Support for Ambitious Reform and Energy Agenda

The Kyrgyz Republic is taking a significant step toward its development aspirations with a bold package of reforms supported by the World Bank under the First Sustainable and Inclusive Growth Development Policy Operation. The initiative is designed to stimulate inclusive economic growth, ensure sustainable energy access, and strengthen social and fiscal resilience, as the nation targets upper-middle-income status by 2030.

A Transformative Vision Anchored in Energy and Inclusion

At the heart of the Kyrgyz government’s strategy is the Kambarata-1 Hydropower Project, a landmark initiative envisioned to transform the national energy landscape, drive industrial development, and catalyze regional integration. The government, in close collaboration with the World Bank Group and other development partners, is advancing comprehensive reforms to ensure that this project delivers equitable and lasting benefits for all citizens.

“The 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 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.”

Key Reform Pillars Supported by the Operation

The World Bank’s support, totaling $101 million in concessional financing, is aimed at bolstering reforms across three critical domains:

1. Modernizing the Energy Sector

Recognizing the strategic importance of energy for economic transformation, the reforms include:

• Revising electricity and heating tariffs with protections for low-income households.

• Promoting transparency and financial sustainability in energy utilities.

• Attracting private investment into renewable energy, including solar and wind projects.

• Improving governance and efficiency across energy institutions.

These steps are designed not only to reduce energy losses and improve reliability but also to help Kyrgyzstan emerge as a regional energy exporter.

2. Strengthening Social Services and Resilience

The Kyrgyz Republic aims to ensure that economic progress reaches its most vulnerable citizens by focusing on:

• Enhancing education outcomes, particularly in underserved regions.

• Expanding targeted social safety nets to mitigate poverty.

• Modernizing water infrastructure to improve access and hygiene.

• Addressing regional disparities and promoting inclusive public service delivery.

This pillar reflects a commitment to human capital development, recognizing that long-term prosperity is contingent upon inclusive access to quality services.

3. Advancing Fiscal Sustainability and Business Environment

To foster private-sector-led growth and improve public sector efficiency, reforms will:

• Modernize fiscal and procurement legislation to enhance transparency and reduce corruption.

• Streamline regulatory processes to boost competitiveness and investor confidence.

• Improve budget discipline and public investment management.

• Expand tax base efficiency while ensuring equitable policies.

These reforms aim to create a fertile environment for entrepreneurship and foreign direct investment, essential for long-term economic dynamism.

Financing Details: Concessional and Affordable

The financing package comprises two components provided through the International Development Association (IDA):

• $68 million zero-interest credit with a 50-year maturity and 10-year grace period.

• $33 million zero-interest loan with a 12-year maturity and 6-year grace period.

This highly concessional structure ensures that the government can undertake reforms without incurring unsustainable debt burdens, supporting long-term macroeconomic stability.

Broader Development Context

This operation is part of a broader World Bank program in the Kyrgyz Republic, currently encompassing 25 active projects with a total commitment of $1.4 billion. These projects span vital sectors such as education, infrastructure, digital development, agriculture, and health.

The World Bank’s overarching mission to “end extreme poverty and promote shared prosperity on a livable planet” is strongly aligned with Kyrgyzstan’s 2030 vision. With the right mix of policy commitment, institutional support, and international cooperation, the Kyrgyz Republic is poised to turn these reforms into measurable gains for its citizens.

Outlook

As the Kyrgyz Republic embarks on this transformative path, the success of these reforms will depend on continued political will, effective implementation, and robust stakeholder engagement. If executed successfully, the First Sustainable and Inclusive Growth Development Policy Operation could serve as a model for energy-driven development in the broader Central Asian region.