Comprehensive Development Framework of the Kyrgyz Republic to 2010 EXPANDING THE COUNTRY'S CAPACITIES National Poverty Reduction Strategy 2003-2005 FOREWORD The current phase of Kyrgyzstan’s development clearly requires quality changes in both the State and the society. Practical steps must be taken in the implementation of the Comprehensive Development Framework of the Kyrgyz Republic to year 2010 (CDF) and the National Poverty Reduction Strategy (NPRS). Timely achievement of high quality results in priority development areas will be the proof of the effectiveness of our actions. Swift adjustments of society and the State to progressive changes will become the key to our common success. Our vision of the future must be kept in mind, together with our history. We must continuously learn and improve ourselves, and work hard to keep up the pace of development. Comprehensive actions, based on modern management methods, are needed. We cannot afford to make mistakes. The loss of time and opportunities is inexcusable in the development of the people, the society, and the history of our nation. We must abandon illusions, overcome inertia and complacency. The community will support the initiatives of the authorities only if plans and actions benefit ordinary people and ensure fuller and more consistent implementation of human rights and freedoms proclaimed in the Constitution of the Kyrgyz Republic. This document, detailing the NPRS, sets out our nation’s approach to dealing with our most immediate and difficult problem – human poverty. Poverty manifests itself in many forms. These include violation of human rights. Poverty, coupled with inequality, increases the vulnerability of social, economic, and political freedoms, generates social tension. For this reason, we have identified implementation of basic human rights and freedoms, and development of democracy as key factors for the successful implementation of CDF and NPRS programs. We must consistently and emphatically reduce poverty in all its forms because it infringes human dignity and creates an obstacle to its adequate development. An intensive pace of reform requires effective management. We urgently need a strong, upright, and fair public sector administration that works in the interests of the people. Its activities should be transparent and accountable. We must take a strong position on eradication of corruption, bureaucracy, and all forms of crime. The country needs professional managers and progressive reformers who will apply world standards in implementing new initiatives for the development of society, while protecting the interests of the State abroad. It is necessary to optimize the structure of administrative institutions in order to achieve reasonable distribution of responsibilities between the State and the private sector. We need well-developed democratic institutions committed to constructive development. We must build a state where protection of human rights is unshakable law. We must achieve sustainable and dynamic economic growth. We must give a new impetus to economic development through an aggressive export policy. We must secure stable traditional markets for our domestic goods, promote our goods in new markets, and make use of our WTO membership. Extensive processing of domestic produce should be promoted in all regions of the Republic. We must strengthen the stability of the banking system. It should provide a full set of necessary financial services to the real sector, ensure safety and profitability of people’s deposits and be customer friendly. The non-bank financial institutions must also be actively promoted; they remain an untapped resource of which we should learn to make effective use. We need to upgrade and expand the nation’s economic infrastructure in order to accelerate the development of the whole economy. The energy sector should be developed on principles of fair competition, effective corporate management, reduction of losses and costs, and accessibility of services to people. Each residence must be warm and have light. All the natural resources offered by our mountains that occupy over 90 percent of our country’s territory, should be wisely managed for the good of the nation. Rural territories and small towns should be actively developed in order to ensure employment and higher living standards. We will accelerate the development of towns and the service sector and make them the beacons of successful reform. With competition, the quality of our services will rise to the world standards. Towns should become clean and attractive. Nature offers us unique conditions for the development of tourism. We must fully take advantage of this and create conditions attractive to tourists from all over the world. Through development of telecommunications and information technology, we intend to build an information society. This kind of environment will help society to be more aware of national issues. Citizens, towns, villages and remote and mountainous areas, will be able to participate directly in the creation and implementation of measures related to the development of the Republic. We should be known throughout the world as a country that has set its course on democratic and sustainable development and alleviation of poverty. In order to ensure sustainable development, we should concentrate our efforts on achievement of identified goals. It is necessary to: • Direct state budget funds only for the support of priorities under the regional and sectoral development programs. • Achieve effective implementation of the Public Investment Program. • Ensure quality development of human resources. • Use material resources rationally and introduce new technologies. • Eliminate all obstacles and create new competitive advantages for the nation in order to attract direct investment into economy. We must ensure economic growth for the benefit of each and every citizen of the Kyrgyz Republic. We need to ensure pro-poor economic growth. The State must fulfill its social obligations to the population in a timely manner. We need to provide adequate and targeted social assistance to the population. It is necessary to achieve fair redistribution of income in the interests of the poor and needy. Special attention should be given to pensioners, disabled, and children. We must provide all possible support for the family – the foundation of any strong society. It is necessary for people to receive accessible and high-quality education. Science and education should become a single process, oriented to acceleration and quality development of priority areas. The population should be healthy and be provided with accessible and high-quality health services. It is important to promote healthy life styles. We must safeguard cultural traditions. It is important to create incentives for development and change of mentality towards quick adaptation to the development process. People must be encouraged to develop themselves. We will increase employment through effective development of the labor market and creation of new jobs. People must feel confident in their strengths, believe in the reality of opportunities for creating a better life for themselves and their children. Deepening integration processes necessitates consolidation of our efforts and the assistance of the international community for a more successful development of Kyrgyzstan. We express our gratitude to donor-countries and international agencies for their intention to continue constructive assistance to our reform processes and participation in the implementation of Kyrgyzstan’s development strategies on equal partnership principles. The National CDF Council urges all stakeholders in the development process – public sector administration, the private sector, local communities and civil society – to unite all efforts in purposeful and persistent work for the reduction of poverty throughout the nation. We call on the people of Kyrgyzstan to maintain civil peace and unity and to support the reforms provided for in the CDF and NPRS programs. We are to jointly implement the National Poverty Reduction Strategy, a Strategy that identifies clear priorities and provides for the rational management of all available resources and growth reserves. This Strategy envisages effective mechanisms for the development of the private sector, protection of the socially disadvantaged, revival of the key economic sectors and strong social partnership. We are strongly confident that active, free, and constructive participation of each citizen in Kyrgyzstan’s development will help to overcome difficulties and obstacles. We will use our comparative advantages to make Kyrgyzstan a prosperous democratic state. A. Akaev, President of the Kyrgyz Republic, Chairman of the National CDF Council CONTENTS INTRODUCTION ............................................................................................................................................... 3 EXECUTIVE SUMMARY................................................................................................................................... 5 CHAPTER I. THE SCALE OF POVERTY....................................................................................................... 27 CHAPTER II. SUSTAINABLE STABILIZATION AND DYNAMIC NATIONAL DEVELOPMENT................. 32 1. Expanding National Potential through NPRS..................................................................................... 32 CHAPTER III. FORMATION OF AN EFFECTIVE STATE ............................................................................