Kyrgyz Republic - Second Sustainable and Inclusive Growth Development Policy Operation for the Kyrgyz Republic

Overview & Synopsis

The development objective of the Second Sustainable and Inclusive Growth Development Policy Operation for Kyrgyz Republic is to ensure sustainable and equitable energy supply, enhance social service delivery and climate resilience, and strengthen fiscal sustainability and improve the business environment. The operation supports energy sector measures to move toward full cost recovery through a Medium-Term Tariff Policy and a transparent heating tariff methodology, strengthen governance of state-owned energy enterprises through merit-based board nominations and disclosures, and catalyze private investment in renewables by introducing competitive, transparent procurement for public-private partnership projects. It advances social outcomes by improving targeting and coverage of the child-focused Uy Bulogo Komok benefit, scaling livelihoods support through the Social Contract for predominantly female beneficiaries, and linking inter-budgetary targeted transfers to evidence-based local development plans. Climate actions include integrating the National Green Taxonomy into bank regulatory reporting to track green lending, establishing a modern Climate Action Law with monitoring, reporting and verification and carbon crediting rules, and piloting a tariff framework and district-aggregated service model to improve water supply and sanitation sustainability and efficiency. Fiscal and governance reforms introduce a rules-based framework with upper limits on public debt and the annual deficit, establish prudent procedures for government guarantees, and require standardized assessment and reporting of direct and contingent liabilities from public-private partnerships. The business environment is strengthened through a new Competition Law with merger control, cartel leniency and state aid oversight, streamlined licenses and permits, and increased procurement transparency via a single e-procurement window, competitive pharmaceutical purchasing, and disclosure of non-competitive awards, together intended to raise cost-recovery in energy and water, mobilize renewable investment, expand social protection effectiveness, boost firm entry, and reduce fiscal and procurement risks.