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Kyrgyzstan
>> Regional Overview >> Kyrgyzstan Overview Activity Data Sheet
PROGRAM: Kyrgyzstan
TITLE & NUMBER: Increased Soundness of Tax and Budget Policies and Administration, 116-012
STATUS: Continuing
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $2,300,000 FSA
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $2,200,000 FSA
INITIAL OBLIGATION: FY 2001 ESTIMATED COMPLETION DATE: FY 2005Summary: Increased soundness of tax and budget policies and administration will enable Kyrgyzstan to make the transition from a command economy to an economy driven by market forces. The goal of this objective is to increase the soundness of tax and budget policies and administration. USAID's fiscal reform program will help to: 1) develop an effective tax system that should raise the revenue needed by the public sector, placing a minimal burden on the taxpayer; 2) implement program budgeting and proper execution of the budget to ensure effective delivery of services at the lowest cost; and 3) improve the allocation of resources at the local level to better support local development issues.
Program Categories include fiscal reform.
Key Results: Key results needed to achieve this objective are: 1) improved tax code and implementation of the code, 2) improved budget development and execution, and 3) improved intergovernmental finance.
Performance and Prospects: The Government of Kyrgyzstan took many positive steps to improve tax and budget policy and administration in 2000. The general deficit as a percentage of GDP, was estimated to be less than 1% in 2000, as compared to 2.7% in 1999. At the same time, the percent of tax revenues as a share of GDP was 12.4%, below the level anticipated. Yet, despite the fall in revenues, the government continued to finance its fiscal deficit in a non-inflationary manner.
USAID helped the Government increase the number of government agencies adopting program budgeting from 11 in 1999 to 71 in 2000 (all but 7 agencies), helping institutionalize this process. In 2000, program budgeting expanded to the local level in Osh and the city of Bishkek.
With the cooperation of the State Tax Inspectorate, the implementation of new instructions and commentary to the tax code began this year. This activity contributes to the development of a culture of voluntary compliance and reduces the corruption and administrative inconsistencies that stifle investment.
Finally, USAID supported the development of an independent Fiscal Analysis Unit within the Parliament. This unit is enabling lawmakers to gauge the impact of legislation on the economy and the budget and to play a more active role in reform of the tax and budgetary systems.
In FY 2001 USAID plans to obligate $2,300,000 for technical assistance, capacity building and special studies to strengthen fiscal reform efforts.
In FY 2002, USAID will help the Ministry of Finance to streamline tax administration to increase efficiency, reduce corruption and introduce fairness and consistency. USAID will also work with the Ministry to improve in-system and intergovernmental finance. A continued focus on more accurate automated revenue and expenditure systems will enable ministries to improve the allocation and management of revenues at the local level, especially for health and education. USAID will assist local governments to adopt transparent budgeting practices to reduce waste and abuse and control spending. Finally, in FY 2002, USAID will perform an evaluation of the fiscal environment in Kyrgyzstan.
Beneficiaries: The direct beneficiaries of USAID assistance are the national and local government agencies in need of tax revenues and sound budget policies, as well as those parties to whom the government owes money (i.e., arrears). Indirectly, the impact of improved fiscal policies on economic growth and development fosters greater economic and social stability for the people of Kyrgyzstan.
Possible Adjustments to Plans: USAID will increasingly shift activities to work more closely with parliament. Additionally, given the success of the local budget reforms, USAID will begin to concentrate our efforts more in that area. Also, recent requests for assistance with macroeconomic forecasting may necessitate some increase of assistance in this area.
Other Donor Programs: The International Monetary Fund (IMF) has replaced its tax advisor with a debt advisor, in part to avoid overlap with USAID's program. The IMF also helped the government to develop amendments to the tax code, and has been instrumental in preventing legislation that would reduce tax revenues. European Union-Technical Assistance for the Commonwealth of Independent States (EU-TACIS), which had been working on macroeconomic forecasting, completed its program in 2000.
Principal Contractors, Grantees, or Agencies: Barents Group implements the fiscal reform activity.
FY 2002 Performance Table
Selected Performance Measures: Increased Soundness of Tax and Budget Policies and Administration, 116-012
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY01 (Plan) FY02 (Plan) Indicator 1: Tax Revenues as a Percent of GDP 12.5% 14.3% 13.9% 12.4% 14.9% 15.5% Indicator 2: Improved Tax Code and Implementation of the Code N/A N/A N/A 43.5% 50% 60% Indicator 3: Improved Budget Development and Execution N/A N/A N/A 36.1% 40% 50% Indicator 4: Improved Intergovernmental Finance N/A N/A N/A 33.3% 35% 45% Indicator Information:
Indicator Level (S)or(IR) Unit of Measure Source Indicator Description Indicator 1: SO Percent The IMF's July 2000 Assessment of the Fiscal Environment. Quarterly or yearly assessments provided by other donors and KPMG/Barents. Tax revenues as a percent of GDP. Indicator 2: IR Percent The IMF's July 2000 Assessment of the Fiscal Environment. Quarterly or yearly assessments provided by other donors and KPMG/Barents. Total number of tax code benchmarks achieved as a percent of total number of tax code benchmarks. Indicator 3: IR Percent The IMF's July 2000 Assessment of the Fiscal Environment. Quarterly or yearly assessments provided by other donors and KPMG/Barents. Total number of budget development and execution benchmarks achieved as a percent of total number of budget development and execution benchmarks. Indicator 4: IR Percent The IMF's July 2000 Assessment of the Fiscal Environment. Quarterly or yearly assessments provided by other donors and KPMG/Barents. Total number of intergovernmental finance benchmarks achieved as a percent of total number of intergovernmental finance benchmarks. U.S. Financing
(In thousands of dollars)
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Last Updated on: May 29, 2002 |
