Kyrgyzstan

This report presents the main findings and conclusions from the project on “Low-Carbon Public Spending at the National Level in Kyrgyzstan: Designing a Green Public Investment Programme”, implemented within the framework of co-operation between the Organisation for Economic Co-operation and Development (OECD) and the Kyrgyz Republic (henceforth, also Kyrgyzstan), as well as the GREEN Action Task Force, for which the OECD provides a secretariat.

This chapter introduces the proposed Clean Public Transport Programme. The programme is designed to be implemented in two phases: Phase 1, a pilot phase that includes urban transport in two selected cities (Bishkek and Osh); and Phase 2, an extension of the programme to cover suburban areas of the pilot cities and inter-city public transport in Kyrgyzstan. The chapter summarises its expected environmental and socio-economic benefits, the costs involved, as well as a possible financing strategy and optimal co-financing level.

The general regulatory framework includes various acts that affect public transport, such as the legal relationships between the transport operators and passengers, and between operators and public administration bodies. Besides technical and road safety regulations, it also includes fiscal (such as customs duties for imported vehicles), social (consumer) and environmental protection (such as emissions or energy efficiency standards).

This chapter provides a brief overview of the main environmental issues facing Kyrgyzstan’s energy and transport sectors, to set the scene for the proposed Clean Public Transport Programme. It reviews the key policy documents and international environmental agreements to which the country is committed in order to adopt a greener development path, and outlines the structure of this report.

This chapter presents an overview of the project cycle management procedures developed for each project pipeline identified as part of this green public investment programme. Essentially, the implementation unit should ensure that the programme follows these procedures. A well-designed process – which is the responsibility of the programming entity – should guarantee that only eligible projects compete for public support and that the most cost-effective ones are selected for financing and implementation.

Measuring the environmental efficiency of an investment implies calculating the unit cost of decreasing, for example, PM2.5 emissions. The unit cost should be calculated as the difference between PM2.5 emissions from old diesel buses and from new buses. The calculation should use real emission factors from the model.

This chapter briefly describes the main demographic, macro-economic and environmental issues in Kyrgyzstan of relevance to the transport sector. It presents an overview of the urban public transport system in the country, as well as the level of greenhouse gas emissions and air pollution in the main urban centres. It also analyses the major health risks associated with the main air pollutants. This review forms part of the justification for the need for public support for investments in the transport sector.

The spreadsheet-based Optimising Public Transport Investment Costs (OPTIC) Model is is a simple, easy-to-use decision support tool prepared by the OECD to support the Government of Kyrgyzstan in preparing and estimating the costs and environmental benefits of the Clean Public Transport (CPT) Programme. It was used in particular for costing the replacement of the old bus fleet in urban centres with modern buses equipped with engines that run on:

This overview looks at buses that run on four major types of cleaner fossil fuels or other sources of power. These include compressed natural gas (CNG)/liquefied natural gas (LNG), liquefied petroleum gas (LPG), diesel with Euro VI engines and electricity.

This chapter summarises the economic analysis conducted to assess the viability of the deigned Clean Public Transport Programme. It begins with a general overview of clean technologies and fuels in the transport sector, as well as a specific review of the energy market in Kyrgyzstan. It then describes the economic aspects of purchasing and running buses, and finally assesses potential sources of government financing available for the programme.

Following the shock of the collapse of the Soviet Union and the disruption caused by the rapid transition to a market economy, Kyrgyzstan is enjoying a period of economic and political stability. However, the decline in income poverty has slowed over the past decade and certain measures of broader deprivation are alarmingly high, reflecting the challenge of improving services in a context of severe fiscal constraints. Tight labour market conditions are resulting in high levels of international migration, which is a boon for the Kyrgyz economy but socially disruptive. Major long-term threats related to demographics and climate change are on the horizon.

This chapter evaluates the effectiveness of the largest components of the social protection system according to their coverage rates, adequacy, equity and efficiency, using administrative and household survey data. It examines the Monthly Benefit for Poor Families with children (MBPF), the Monthly Social Benefit (MSB) and contributory pensions paid by the Social Fund, as well as the overall effectiveness of the pension and the health-care systems in responding to the population’s needs. It also analyses the impact of possible reforms to the state benefits for children.

Social protection in Kyrgyzstan covers a broad range of risks, receives a significant proportion of government funding and plays a critical role in alleviating poverty. However, provision is unevenly distributed; expenditure on social insurance is approximately five times higher than spending on social assistance, while social services and labour market policies for vulnerable workers are extremely small. Moreover, important gaps in social protection coverage exist, particularly for the urban poor, young people and the significant numbers of workers employed abroad.

This chapter examines spending on social protection from a systemic and whole-of-government perspective. It locates social protection expenditure within the Government’s overall budget and examines spending trends across the different pillars of the social protection sector, as well as across individual programmes within this sector. It also analyses the composition of government revenues and the financing of social protection in particular, identifying the increasing subsidisation of the social insurance system by the Republican Budget as a major cause for concern. It concludes with a fiscal incidence analysis showing the overall system of taxes and transfers significantly reduces inequality but its impact on poverty is less clear.

This chapter charts the evolution of social protection in Kyrgyzstan. It outlines the economic, political and legislative context for social protection, which is still undergoing transition from a Soviet-era system predicated on full employment, to a system more appropriate for a market-based economy with chronic unemployment and long-term poverty. It inventories existing social protection schemes, analyses their key design features and scale of operation, and discusses how well they meet the present and future needs identified in Chapter 1.