OREANDA-NEWS. May 05, 2008. The World Bank’s Board of Directors approved an IDA grant today in the amount of US\\$ 9million for the Agricultural Investments and Services Project in the Kyrgyz Republic, reported the press-centre of World Bank.

With food prices at an all time high around the world, the new project will help to reduce rural poverty in the country by increasing productivity and sustainable pasture management. Almost three quarters of the poor and extreme poor live in rural areas, where the prevalence of poverty is higher than in urban areas: 51 percent of the rural population compared to 30 percent of the urban population.
 
“In the Kyrgyz Republic, agriculture is the structural backbone of the economy, accounting for about 40 percent of total employment and over one-third of GDP.  The importance of this project for the economy and food security is even more evident in light of the current food crisis,” said World Bank Country Manager Roger J. Robinson.
 
On a global scale, the World Bank is working closely with many other donors to address this crisis.  For example, World Bank Group President Robert B. Zoellick today announced that the Bank is creating a rapid financing facility for grant support to countries in need.
 
In the Kyrgyz Republic,agricultural growth has been and remains critically important for the reduction in rural poverty.  From 1996 to 2001, when agricultural GDP increased at an average annual rate of 8.1 percent, rural poverty declined more rapidly and broadly than urban poverty.  When the pace of agricultural growth slowed during 2002-2006, so did that of rural poverty reduction.
 
Sustained agricultural growth and measures to raise farm productivity and farm incomes are key priorities of the Government.  In the agricultural sector the main goals are to increase productivity, income growth and environmental soundness, placing high priority on the development of agricultural support services and on improving the normative-legislative base governing agriculture.  The “Agrarian Policy Concept of the Kyrgyz Republic to 2010”, prepared in 2004 by the Ministry of Agriculture, Water Resources and Processing Industry (MAWRPI), highlights the importance of introducing a more sustainable system of pasture management, of strengthening agricultural advisory and information services, and of improving veterinary service provision.
 
“We expect that the project will help improve the management of a major resource – the country’s pastures,” said Task Team Leader Brian Bedard.  By relying on the community-driven approach and on devolving responsibilities for pasture management and investments to the communities, the project will improve governance in rural areas.  According to Bedard, it will enable the rural population to better operate viable farming enterprises and to manage natural, financial and physical resources.  “In addition, the project will significantly improve the environmental sustainability of pasture use and, through its support for integrated production management and soil fertility management, of the use of arable land,” Bedard noted.  This initiative will also finance activities aimed at improving the quality and coverage of agricultural support services, including delivery of animal health services and implementing a brucellosis control program.
                      
The Agricultural Investments and Services Project is expected to be implemented over five years, starting in the summer of 2008.  Implementation of this project will be a joint effort of the Ministry of Agriculture, Water Resources and Processing Industry and the Community Development and Investment Agency (ARIS).
 
The project will be co-funded by the rural communities and farming enterprises themselves who will co-finance essential activities that are in their own direct interest; this contribution is estimated to exceed US\\$3 million.  The Government’s budgetary contribution is likely to be about US\\$0.5 million.  The International Fund for Agricultural Development (IFAD) will provide a co-financing grant of US\\$ 9 million, and the Swiss Development Cooperation will contribute approximately US\\$2 million in grant funds.
 
The World Bank is one of the largest sources of development assistance to the Kyrgyz Republic.  The Kyrgyz Republic borrows from the World Bank on highly concessional terms – no interest, and only a 0.75% service charge.  Credits are repayable in 40 years, including a 10-year grace period, while grants require no repayment.  From 2003 to mid-2005, half of the World Bank’s assistance to the Kyrgyz Republic was in grant form. Since July 2005, the Bank had provided all funding to the Kyrgyz Republic on a grant basis.