Publication: Kyrgyz Republic Public Expenditure Review: Better Spending for Building Human Capital
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2021-03
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2021-03
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The Kyrgyz Republic economy has been hit hard by the Coronavirus disease of 2019 (COVID-19) pandemic, putting at risk the development progress achieved in recent years. The COVID-19 pandemic has added substantial pressures on the country’s fiscal space for investing in human capital. The pandemic has eroded the Kyrgyz Republic’s recent gain in human capital development. Education and health are critical factors for improving human capital and sustaining inclusive economic growth and development. The Kyrgyz Republic has continued prioritizing education and social protection as its development priority. This report, phase 2 of the programmatic public expenditure review (PER2), aims to assist the government of the Kyrgyz Republic in identifying key constraints to efficient and effective public spending and policy options for improvements in three areas: education, health, and pensions, which have become more pressing post-COVID-19. Ensuring effective and sustainable pension system may help to safeguard human capital. Hence, ensuring adequacy, effective, and efficient spending in education, health, and pensions are critical to close Kyrgyz’s human capital gaps. To this end, PER1 identified critical areas to increase fiscal space for development priorities including investing in human capital including curtailing the growth of public wages while reducing tax expenditures and the large energy subsidies and quasi-fiscal deficits.
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“World Bank. 2021. Kyrgyz Republic Public Expenditure Review: Better Spending for Building Human Capital. © World Bank. http://hdl.handle.net/10986/35790 License: CC BY 3.0 IGO.”
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Publication Kyrgyz Republic Public Expenditure Review Policy Notes : Public Wage Bill(Washington, DC, 2014-05)Restraining the growing wage bill expenditures while enhancing the performance of the public sector remains one of the government's major development priorities. Wage bill levels in the Kyrgyz Republic are high compared to the majority of Europe and Central Asia (ECA) countries, constituting almost one third of government expenditures. Over the last few years, the government has undertaken important steps towards enhancing pay systems and improving competitiveness of pay in public health and education sectors accounting for almost 66 percent of the wage bill. The Kyrgyz Republic confronts the need to restrain its public wage bill as part of its mid-term fiscal strategy, as well as the need to improve the performance of the public sector. The analysis, undertaken in this policy note, suggests that the government should consider the following measures and reforms: improve predictability of the wage bill and avoid further ad hoc increase in wages; moderate and gradual consolidation of employment; any increase of the base pay elements has to be linked to modest and gradual consolidation of public sector employment, and should be limited to inflation as needed; establishment controls need to be strengthened through sound monitoring of the number of employees and payroll in all parts of the public sector; and civil service pay reform has to be undertaken with a unified pay system, gradually introduced at all levels of the government. This note discusses public sector wage management in the Kyrgyz Republic, by analyzing wage bill expenditure levels over the last decade with a closer examination of dynamics in 2008-2011.Publication Kyrgyz Republic Public Expenditure Review Policy Notes : Strategic Setting(Washington, DC, 2014-05)The current approach to fiscal policy is delivering suboptimal outcomes for the citizens of the Kyrgyz Republic. The past five years have been difficult for the Kyrgyz Republic, with one shock following another. Government spending ballooned to 39 percent of GDP in 2012 one of the highest ratios among developing countries globally, as the authorities tried to mitigate the shocks. However, despite increases in spending, the quality of health services remains poor; above 80 percent of 15 year-olds are classified as illiterate; wages in the public sector are low; and only 6 percent of social assistance reaches the poorest members of society. In addition, risks are mounting in the pension system, few instruments exist to support the vulnerable and the physical capital stock is depreciating, especially in the energy sector. This Public Expenditure Review (PER) focuses on the effectiveness, level, and composition of public spending in number of sectors. The objective of this synthesis note is to better understand the overall environment for fiscal policy as well as the nature and composition of public revenues and expenditures. The sectoral policy notes review the challenges and options in specific sectors, namely, education, health, pensions, social protection, and energy as well as cross-cutting themes such as the wage-bill and public investment management and intergovernmental relations. While more detailed sector-specific recommendations are contained in the sectoral policy notes, more general recommendations on fiscal policy will also contribute to sustainable fiscal consolidation.Publication Kyrgyz Republic Public Expenditure Review Policy Notes : Pensions(Washington, DC, 2014-05)Today, the Kyrgyz pension system plays a major role in poverty alleviation of the elderly but this role is diminishing fast due to low coverage of working age population. The system currently provides pensions to more than 90 percent of the population over age 65 thus being a significant buffer against poverty. Over time, though, the poverty reduction effect of the pension system is expected to weaken substantially as the current low coverage rates among the working age population translate into much lower coverage rates of about only 60 percent for the future old age population. 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These circumstances prompted the Kyrgyz Republic to adopt a wide range of reforms to accelerate the transition to a market economy, emphasizing price and trade liberalization, and the shift of ownership of state assets to the private sector, including land, and most state-owned enterprises (SOEs). Since the mid-l990s, the economy has shown steady signs of recovery. Despite these favorable developments, the Kyrgyz Republic remains the second poorest of the FSU republics, and one of the poorest countries in the world. Absolute poverty affected about half of the population in spite of progress made in 2001, and, although poverty is highest in rural areas, there are large regional disparities, where transient poverty is high as a result of high consumption volatility. Access to public services such as water and sewerage, electricity, district heating, and telecommunication services, is very low. This Public Expenditure Review (PER) has sought to provide a strategic framework for fiscal adjustment and public expenditure reform, consistent with the government's objectives for accelerated growth and poverty reduction. The broad contours o f the strategy are: To stabilize the government's finances through stronger revenue, and expenditure management instruments and institutions, as well as through debt relief; to re-align sector policies with the most essential country priorities, with a general thrust toward improving targeted, and efficient use of resources in both social and public infrastructure sectors; to revamp the public administration to improve policy implementation and service delivery; and, to secure external financial support. Given the fragile external debt situation and the extent of poverty, priority has to be given to fiscal adjustment and the expenditure reform agenda. Government performance needs to be monitored, particularly at the grass roots levels, through systematic diagnoses of institutional problems, and through quantitative performance indicators, to monitor progress and competition in public service delivery.
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