Kyrgyzstan Goes to Donors for Post-Unrest Aid

International donors have shown they are willing to help Kyrgyzstan recover from the damage caused in June’s ethnic violence, but they will defer firming up aid offers until a new government is formed after the October parliamentary election. 

Analysts in Kyrgyzstan say it is crucial to ensure that any foreign aid is used effectively.

A donor conference in the Kyrgyz capital on July 27 resulted in pledges of 1.1 billion US dollars over the next two-and-a-half years. The money will go towards restoring infrastructure destroyed or damaged during several days of clashes in and around the southern cities of Osh and Jalalabad in June, which left at least 330 people dead and homes, shops and official buildings ruined by looting and arson attacks.

Apart from the immediate devastation cause by the unrest, the Kyrgyz economy also suffered as neighbouring Central Asian states temporarily closed their borders, stifling trade.

Farid Niazov, the government’s public relations coordinator, said the funds would go towards covering an anticipated large budget deficit resulting from lower-than-expected revenues and the high cost of rebuilding the south, as well as directly towards reconstruction work in Osh and Jalalabad.

A second donor conference, this time hosted by neighbour Kazakstan, is due to take place once the October parliamentary election is over and Kyrgyzstan gets a government to replace the transitional administration in place since April, when the then president Kurmanbek Bakiev fled the country.

The timing of the event was announced on August 16 by Kazak prime minister Karim Masimov, during a bilateral meeting in his country’s capital Astana to discuss aid plans for Kyrgyzstan.

The donor conference will follow up on the pledges made in July and invite further offers of assistance.

Kazak deputy foreign minister Nurlan Yermekbaev, who attended the Astana meeting, said at least 29 countries and 17 international organisations had been approached and asked how much they would contribute.

“These negotiations will be more detailed and specific in nature. The kind of assistance on offer will be discussed – whether it is to be grants or loan, the conditions, the timing, and so on,” Bishkek-based analyst Askar Beshimov told IWPR.

Beshimov said donors wanted to wait to firm up the detail with a more formally constituted government than the present interim body.

At the Astana meeting, Kyrgyz finance minister Chorobek Imashev said, “Our long-term strategy is not to depend on foreign aid but to rely on our own resources, to generate revenues from economic activity.”

Beshimov, however, argues that the priority at the moment is survival rather than planning for the future.

“We have a 20-million [dollar] budget deficit; we are firefighting local conflagrations as they begin here and there, and we aren’t thinking about the country’s strategic development even two or three years ahead. And we are expecting gross domestic product to fall by six per cent,” he said.

At the same time, Kyrgyzstan is having to service an external debt of over two billion dollars.

“It’s possible there may also be a discussion on postponing the repayments, although this will just mean the payment schedule is put back,” Beshimov said.

The net result of new loans will be to increase Kyrgyzstan’s debt burden further. However, analysts say the key thing is not how much money comes in, but how it is used so that it contributes to real economic growth.

According to economist Jumakadyr Akeneev, “Over the last 19 years, loans have not been used effectively, although they were taken out to help the economy develop. Now we’re forced to accept money to fund our current needs, and we must not repeat the mistakes of the past.”

Akeenev would like to see new mechanisms put in place to make sure aid funding is used transparently and accountably.

“If the authorities set up a supervisory council that includes representatives of civil society, we will be able to ensure transparency in the use of loans,” he said.

Asyl Osmonalieva is an IWPR-trained journalist in Bishkek.

This article was produced jointly under two IWPR projects: Building Central Asian Human Rights Protection & Education Through the Media, funded by the European Commission; and the Human Rights Reporting, Confidence Building and Conflict Information Programme, funded by the Foreign Ministry of Norway.

The contents of this article are the sole responsibility of IWPR and can in no way be taken to reflect the views of either the European Union or the Foreign Ministry of Norway.