Note: This document may not always reflect the actual appropriations determined by Congress. Final budget allocations for USAID's programs are not determined until after passage of an appropriations bill and preparation of the Operating Year Budget (OYB).
KAZAKHSTAN
FY 1997 FY 1998 FY 1999 Actuals Estimate Request FREEDOM Support Act............... $35,500,000 $34,700,000 $46,000,000
Introduction
A free, independent and prosperous Kazakhstan which engages constructively on the international stage is critical for regional stability and peace and in the best interest of the United States. Further, U.S. national interests in oil, gas, and gold-rich Kazakhstan are both commercial and strategic. The country actively promotes Western trade, investment and economic support. Per capita foreign investment is already at levels higher than any other former Soviet republic including Russia. Kazakhstan interacts closely with the other Central Asian republics and, more indirectly, with both the Middle East and the Indian Subcontinent. Most importantly, Kazakhstan is now free of nuclear weapons and it is in the United States' and the world's best interest to ensure this status continues. Efforts to strengthen Kazakhstan's sovereignty and independence also represent an important counterbalance to any attempts to revive the former Soviet empire.
The Development Challenge
USAID's main goal in Kazakhstan is to promote a free market economy with an appropriate social safety net, while promoting necessary legal and infrastructure improvements needed to help create a democratic and civil society. Kazakhstan, the largest recipient of U.S. assistance in Central Asia, has made considerable progress in privatizing government assets and setting up the basic framework for a market economy. Overall macroeconomic management has been quite good, especially considering that Kazakhstan at independence lacked the experience needed to take control of its own economic destiny. After several years of economic decline, Kazakhstan now has registered two consecutive years of positive economic growth (1996 and 1997), while maintaining the tight fiscal and monetary discipline of an International Monetary Fund (IMF) Extended Fund Facility program. Inflation in 1997 was a modest 12% (compared to 29% in 1996), significantly below expectations, and continues to decline. The local currency, the Tenge, is fully convertible and very stable.
A sound commercial law system is a key component of USAID's economic growth strategy, both to encourage foreign investment and because it has led the Government of Kazakhstan to address a range of macroeconomic and structural reform problems that must be resolved before Kazakhstan can join the World Trade Organization (WTO). During the past two years Kazakhstan has made extremely rapid progress in satisfying requirements for WTO membership. For example, with USAID assistance, pro-business bankruptcy, procurement, and foreign investment laws have all been adopted.
Kazakhstan, like its CAR neighbors, had almost no experience in establishing modern financial markets. With USAID technical assistance, Kazakhstan now has a growing stock market, a significantly healthier banking sector, and a dramatically reformed pension system that became mandatory and private in January 1998. USAID assistance has also led to rapid adoption of international accounting standards in Kazakhstan.
Although substantial success was achieved with USAID assistance in privatizing small and medium-sized companies, many large-scale enterprises remain under state control. The Government has committed to privatizing a critical mass of the largest companies and to placing the shares of these companies on the newly created stock exchange. This will provide an attractive option for the newly created private pension funds, which need additional share capital in which to invest.
The Constitution concentrates power in the presidency. The president, who dominates the legislature and judiciary, has the authority to legislate by decree, but has chosen to introduce all major reform legislation through the parliament. The lack of an independent judiciary makes it difficult to deal with corruption issues. Additionally, freedom of assembly is at times restricted, although the government generally respects the basic human rights of its citizens. The judicial system needs to be restructured. Likewise, the media is generally independent, but practices self-censorship. Local government administrative structures and financing mechanisms need strengthening. The deterioration of the health system since 1991 has yet to be addressed. Inefficiencies in the health sector, poor accessibility to services, and quality of care continue to be significant issues. The introduction of affordable primary health care through family group practice and the introduction of new payment systems have demonstrated that cost-effective, quality services are possible and health reform models can work in pilot status. These will need to be more widely supported and expanded. Based on the successful results of the social marketing project, family planning efforts now need to shift to support the greater role the independent health provider can play in providing reproductive health care. In concert with this program, policy issues in the reproductive health and demography spheres need to be addressed. Data and analytical tools also are needed for policy makers to make informed decisions.
Other Donors
The World Bank provides technical assistance for economic restructuring and loans in areas of oil development, urban transport, social protection, public administration and finance, and enterprise development. New projects will address land registration, financial sector adjustment, private sector support, irrigation and drainage, water supply, agricultural privatization, and fiscal reform. EU and major bilateral donors such as Germany, Britain, Japan, France, and Korea provide additional aid, usually in the form of technical assistance and training, for programs pioneered by USAID-funded technical assistance teams.
FY 1999 Program
The request for the Kazakhstan program will focus on economic and democratic reforms. The Partnership for Freedom's new programs to encourage economic growth and develop links between Kazakhstan and the United States will have come on-line in FY 1998.
USAID will deepen its support for structural reforms in Kazakhstan. The USAID strategy focuses on four areas: (1) economic and financial restructuring; (2) democracy building; (3) social transition; and (4) participant training. In the economic reform area, trade and investment issues will receive special attention, especially Kazakhstan's membership in the WTO. Democratization activities include a mix of support for independent media, strengthening the judiciary and parliament, strengthening local government, and developing local Non-Governmental Organizations (NGOs). Work in the social sectors will be closely linked to the economic restructuring objective, especially by using sustainable, incentive-based market systems to deliver needed social services.
In addition to support for accession to the World Trade Organization (WTO), USAID will provide substantial technical assistance designed to promote a more attractive environment for trade and investment in Kazakhstan. USAID assistance will accelerate progress in establishing the commercial regulatory framework necessary to build investor confidence by ensuring property ownership and transfer and commercial transaction rights of market agents.
In the fiscal and financial reform areas, continued support will be provided for implementation of sound tax administration, intergovernmental finance reform, and budget reform, at the national and local levels, as well as a deepening of financial sector reforms in areas of capital markets, pension reform, bank supervision, and accounting reform.
Support will be provided to expand independence of the media, and more emphasis will be placed on building and sustaining local NGOs to ensure more grassroots involvement. Assistance will also continue to independent television networks to ensure that they become sustainable, commercially- viable business operations.
Social transition concerns are linked to economic restructuring issues, because past government-controlled and financed mechanisms are no longer sustainable. Interventions will continue to stress more efficient, market-based approaches to social service delivery, especially in the health sector, where a local reform model now exists for replication.
Cross-cutting and special initiatives will be closely integrated with other activities and address broader strategic and programming concerns, including those in health reform and demography policy. In the area of infectious disease control, cost-saving means will be introduced to prevent and control tuberculosis, a major problem in Central Asia. Family planning efforts will focus on strengthening the primary health care infrastructure through the support of independent family group practices to provide reproductive health services. Participant training will cut across disciplines, and include representatives from public administration, health administration, economic restructuring, democracy, and energy and the environment.
KAZAKHSTAN
FY 1999 PROGRAM SUMMARY*
(in Thousands of Dollars)
Strategic ObjectivesEconomic Restructuring Democratic
TransitionSocial Stabilization Cross-cutting / Special Initiatives Total Privatization -- -- -- -- -- Fiscal Reform 2,000 -- -- -- 2,000 Private Enterprise 15,700 -- -- -- 15,700 Financial Reform 3,500 -- -- -- 3,500 Energy -- -- -- -- -- Environmental Management -- -- -- -- -- Citizens' Participation -- 4,500 -- -- 4,500 Legal Systems -- -- -- -- -- Local Government -- 3,000 -- -- 3,000 Crises -- -- -- -- -- Social Benefits -- -- 2,510 -- 2,510 Environmental Health -- -- -- -- -- Cross-cutting / Special Initiatives -- -- -- 14,790 14,790 TOTAL 21,200 7,500 2,510 14,790 46,000
*FREEDOM Support Act (FSA) funds
USAID Mission Director: Patricia K. Buckles
ACTIVITY DATA SHEET
PROGRAM: KAZAKHSTAN
TITLE: Fiscal Reform, 110-S001.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $2,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Increased soundness of fiscal policies and fiscal management practices.
USAID Role and Achievements to Date: USAID-funded advisors made major contributions to the formulation of a new tax code, adopted in July 1995 and described by some outsiders as perhaps the most modern and transparent of any in the former Soviet Union. On the budgetary side, USAID-funded contractors and USAID-funded Treasury advisors are helping to introduce a new budget classification system, a national and local budget law, and a modern system for managing public external debt. Other USAID-funded advisors are working with Kazakhstani counterparts to ensure a more efficient revenue collection system and to shape more rational and transparent budgetary processes. Now that a new tax code is in place, the focus is on training and hands-on instruction in how to manage and implement the new system. Advisors work directly with counterparts to improve systems and to rationalize the expenditure and taxation authority among the various levels of government (national, oblast, local).
Description: In FY 1999 USAID technical assistance in the fiscal area will concentrate mainly on developing the tax administration capabilities of the Government of Kazakhstan (GOK), as well as further rationalization of the GOK's system of intergovernmental financial relations, with a view toward ensuring that various levels of government operate with greater efficiency in implementing their taxation and expenditure authority.
Host Country and Other Donors: Ongoing efforts in the fiscal arena are coordinated with those of other donors, including the World Bank, IMF, and EU The World Bank is planning a major treasury modernization project, which would involve technical advisors, training and equipment.
Beneficiaries: This effort seeks to benefit tax-paying Kazakhstanis at all income levels by ensuring greater transparency and a more rational revenue collection and budgetary expenditure process. Potential entrepreneurs will benefit as more comprehensible and transparent fiscal systems are adopted. Increased government revenues and a more rational budget allocation system will also lead to more effective governance and greater macro-economic stability.
Principal Contractors, Grantees, or Agencies: USAID activities are implemented through the U.S. Department of Treasury and several USAID-funded contractors, including KPMG/Barents and International Management Communication Corporation.
Major Results Indicators: Baseline Target Govt. deficit as % of GDP 5.2% (1995) 2.8% (1999) (accrued and cash basis) Local govt. revenue as % of total 34% (1995) 42% (1999) GOK maintains compliance with Yes (1995) Yes (1999) IFI conditions Legal framework established No (1995) Yes (1999) Volume of govt. securities $89m (1995) $400m (1999)
ACTIVITY DATA SHEET
PROGRAM: KAZAKHSTAN
TITLE: Private Enterprise, 110-S001.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $15,700,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2001
Purpose: Improved, more sustainable private business operations.
USAID Role and Achievements to Date: Privatization represented the first phase of USAID economic restructuring work in Kazakhstan. By early 1996, more than 17,070 enterprises had been sold through cash auctions. A parallel program of mass privatization involving coupons has also made considerable progress, especially since August 1995. By the middle of February 1996, 22 coupon auctions for a total of 1,716 companies had been held. By some accounts, nearly two-thirds of the industrial employment in Kazakhstan now is in firms that are majority-owned by the private sector. Currently, the Government of Kazakhstan is in the midst of privatizing its major remaining "blue chip" enterprises in the oil and gas and minerals sectors. USAID is assisting the Government to develop fair and transparent procedures for privatizing these enterprises. Since 1995, USAID has also supported the privatization of major energy sector assets, including more than 80 % of the national power generation capacity. It also helped establish an independent regulatory entity for electricity. More recently, USAID has focused greater attention on the policy and legal environment needed to sustain a supportive business climate. To promote competition, USAID advisors worked with the Anti-Monopoly Committee to successfully promulgate reforms that drastically reduced the number of companies subject to pricing and profitability controls. USAID advisors also helped force the breakup of many major holding companies and made sure that they were included in the mass privatization program. They also helped achieve an insurance regulatory framework which promotes competition and ensures foreign participation.
Description: Private sector support represents by far the biggest USAID activity in Kazakhstan. In the area of legal and regulatory reform, advisors are working in key areas including trade and investment, bankruptcy and collateral law reform, and general business law reform; a large training effort in all three areas is underway. Pro-business laws covering bankruptcy, foreign investment, and procurement have all been enacted with USAID support. The general business component targets constraints to business operations by helping the passage of legislation in such areas as contract law and property rights. Many of these efforts are needed to maintain the momentum created by the privatization process and to expand opportunities for U.S. trade and investment in Kazakhstan. Among other accomplishments, USAID technical assistance is playing a critical role in moving the GOK to join the World Trade Organization. Continued advocacy for implementing legal reforms will also promote foreign investment in Kazakhstan's all-important oil and gas industry and help develop the country's power sector. People-to-people efforts and exchange programs such as those supported by the International Executive Service Corps (IESC) and the various farmer-to-farmer programs have proven to be excellent vehicles to identify potential investment opportunities and develop appropriate business plans.
In FY 1999, support for private enterprise reform will focus mainly on furthering commercial law development and related areas such as accounting reform at the enterprise level. The activities have as a major objective the provision of support that will produce a Kazakhstan economy more open and transparent and therefore less susceptible to corrupt practices.
Host Country and Other Donors: Ongoing efforts to strengthen private business operations are developed in conjunction with those of other donors, especially the World Bank, EBRD, and EU. EU also has a special interest in the agricultural sector. World Bank funds are being used to provide consultant services. A World Bank-funded project on private enterprise support is now being
developed. EBRD programs include a loan program comparable to that of the Central Asian-American Enterprise Fund (CAAEF).
Beneficiaries: Specific beneficiaries include the hundreds of thousands of Kazakhstanis who own shares in privatized government enterprises and will gain financially if these new firms are successful. Aspiring entrepreneurs benefit from a transparent, stable and consistent legal environment. The entire population will benefit from a more efficient market-based economic system that produces jobs and increases the availability of goods and services.
Principal Contractors, Grantees, or Agencies: USAID activities are implemented through several private U.S. firms as well as U.S. private voluntary organizations such as the International Executive Service Corps (IESC), Agricultural Cooperative Development International (ACDI), Volunteers in Overseas Cooperative Assistance (VOCA), the U.S. Energy Association (USEA), Harvard Institute of International Development (HIID), and Winrock. The CAAEF also makes an important contribution by expanding the amount of investment and equity capital available to Kazakhstan's private sector.
Major Results Indicators: Baseline Target Share of GDP generated by 24.5% (1995) 60.0% (1999) private sector Number of new laws and policies 0 (1995) 40 (1998) drafted with USAID assistance GOK maintains adherence to IFI Yes (1995) Yes (1999) conditionality
ACTIVITY DATA SHEET
PROGRAM: KAZAKHSTAN
TITLE: Financial Reform, 110-S001.4
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $3,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2001
Purpose: A competitive, private financial sector more responsive to a market-oriented economy.
USAID Role and Achievements to Date: The establishment of the Kazakhstan Stock Exchange in Almaty, and the formation of an independent National Securities Commission, are notable achievements. Coordinated national accounting standards were started in December 1996, and are being implemented during 1997 and 1998 to help tighten financial regulatory guidelines and to enhance monitoring capacity in the banking sector. Through December 1997, more than 150 insolvent banks had their licenses suspended as a result of detailed bank examinations. These actions, combined with sustained discipline by the Central Bank in managing the nation's currency, and the adoption of international accounting standards, are laying a solid foundation for the development of the financial sector. USAID also has played a key role in assisting the Government of Kazakhstan to develop the legal and institutional framework for private pension funds; the country has embarked on the most ambitious pension reform program in the NIS region (as of January 1998, all citizens are required to contribute 10% of their yearly wage to a private pension fund of their choice).
Description: In FY 1999, USAID will continue to promote financial sector reform in the major areas of capital markets, pension reform, bank reform/restructuring, and corporate accounting reform. USAID's thrust is to provide technical assistance and training to developing intermediary and regulatory institutions in the financial sector. Work often entails drafting and introducing new laws, regulations, procedures, and operating systems. Practical, on-the-job training receives special emphasis. High-level policy advice is accompanied by efforts to ensure that counterparts develop the capacity to undertake needed research and analysis on their own.
Host Country and Other Donors: USAID is the major foreign donor working in the financial sector, and the only one involved in the securities area. Work is coordinated closely with the World Bank. Training activities for private banks, currently undertaken jointly by USAID and EU, will be assumed soon by a single institution, which should set the standard for banker training in Central Asia.
Beneficiaries: Immediate beneficiaries include professionals involved in capital market development, such as private bankers, stock brokers, and government officials. New entrepreneurs, as well as a broad range of Kazakhstan's citizens, will benefit by the extension of capital markets that channel scarce financial resources into more productive directions.
Principal Contractors, Grantees, or Agencies: USAID activities are implemented through several U.S. firms (including Carana Corporation, KPMG/Barents, Pragma and IBTCI) in cooperation with local counterparts at the National Bank, the Ministry of Finance, the Kazakhstan Stock Exchange, and the National Securities Commission.
Major Results Indicators: Baseline Target Bank deposits as % of GDP 4.9% (1995) 12.0% (1999) No. of financial services available 4 (1995) 30 (1999) % of banks meeting capital adequacy 66% (1995) 95% (1999) requirements % of firms using new accounting 0% (1995) 60% (1999) standards Types of financial institutions 3 (1995) 11 (1999) No. of companies listed on stock 12 (1995) 80 (1999) exchange No. of private pension funds 0 (1997) 10 (1999)
ACTIVITY DATA SHEET
PROGRAM: KAZAKHSTAN
TITLE: Citizens' Participation, 110-S002.1
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999 $4,500,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2006
Purpose: Increased citizens' participation in political and economic decision-making.
USAID Role and Achievements to Date: The weakness of both the parliament and political parties deprives citizens of two potentially powerful mechanisms for participating, directly and indirectly, in the political process. Neither institution yet is prepared to become a vehicle for popular involvement in the country's political life. As a result, NGOs, the fledgling media, and social and economic movements such as the embryonic pensioners' movement, are necessarily the principal means at this stage for advancing the goal of informed citizen participation. Progress is on target for the NGO development program; there are now over 440 NGOs, more than doubling targets, and the skills of over 700 NGO activists have been upgraded. The media program also is on track, with increased broadcasting of local news by independent stations, although programming in general still is weak. Government responsiveness and accountability has been more problematic. However, parliament recently held an interactive round table to solicit input on proposed legislation; while not entirely open, the session was a tentative first step toward greater transparency.
Description: USAID-funded activities strengthen democratic processes, especially those aimed at enhancing civic participation and education, increasing the flow and sources of information, ensuring transparency and accountability in government, and expanding dialogue between the government and non-government sectors. Parliamentary strengthening programs are underway. The local NGO sector receives special attention to help improve the legal and regulatory environment in which it operates, to enhance its professionalism and management skills, to enable it to effect needed social change, and to provide services. Because of its contribution to democratic, economic and social change, a local bar association is being helped to operate more effectively.
Host Country and Other Donors: The United States is the major foreign donor working in democratization. Programs supported by other U.S. Government agencies, including USIA, are closely coordinated with those of USAID.
Beneficiaries: Immediate beneficiaries include individuals directly associated with Kazakhstan's NGO sector. Many more Kazakhstanis will benefit through the public interest advocacy and social services to be provided as the NGO sector expands. Tens of thousands of Kazakhstanis also benefit from improved programming and management skills at the country's independent television and radio stations. More broadly, all Kazakhstanis benefit from strengthened civil society and the introduction of more democratic norms and practices.
Principal Contractors, Grantees, or Agencies: Several USAID-funded American NGOs, including the American Bar Association/CEELI, the National Democratic Institute (NDI), Internews, and the International Foundation for Electoral Systems (IFES), have promoted democracy in Kazakhstan. Aid to Artisans, the International Center for Not-for-Profit Law, and the Citizens Network for Foreign Affairs, which together form the Counterpart Consortium, also participate in local NGO development.
Major Results Indicators: Baseline Target No. of NGOs engaged in advocacy 0 (1992) 55 (1999) Cumulative # of open hearings or consultative procedures addressing legislative/policy issues 0 (1994) 8 (1999) Average length in minutes of daily independent news broadcasts 15 (1996) 20 (1999)
ACTIVITY DATA SHEET
PROGRAM: KAZAKHSTAN
TITLE: More effective, responsible, and accountable local government, 110-S002.3
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999 $3,000,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1998; ESTIMATED COMPLETION DATE: FY 2005
Purpose: To assist Kazakhstan's democratic and market reform efforts through promoting more effective, responsible, and accountable local government.
USAID Role and Achievements to Date: USAID implemented the Municipal Finance and Management (MFM) Project in Central Asia as part of the Democratic Pluralism Initiatives (DPI) Program from 1994 to 1996 in the town of Atyrau. Many strides toward democracy were made, especially in view of the short life of the project. One achievement was the creation of a long-term development strategy for the local level, which was presented to the GOK to gain its support; under Soviet rule the local level would not have voiced local needs and concerns but merely would have carried out orders from above. A second achievement was the adoption of western accounting practices, which produced clearer information about the locality's finances, and can contribute to reducing the incidence of fraud. A third achievement was the considerable enhancement of citizen awareness, participation, and commitment to the future of Atyrau.
Work carried out in the area of management of municipal housing prompted a dramatic shift in how such housing is managed. The privatization of apartments and the creation of some 4.000 housing cooperatives (whereby the residents, acting through democratically-elected boards, can take control of building management) offer major opportunities for the empowerment of the populace. A more effective method of carrying out what otherwise would be a municipal responsibility is also achieved.
Description: While the Central Government hesitated until recently to take bold steps toward fiscal and administrative decentralization, the President has now stated that the existing system is to be decentralized starting in 1998, including the transfer of additional responsibilities and authorities to local governments. Thus the time is opportune to improve the financing and administration of municipal operations and services, as well as to build the interdependency between local governments and their constituents. Success in this area will also complement the work under Strategic Objective 3.2 (Improve the sustainability of social benefits and services).
Accordingly, a new SO 2.3 program will be instituted in FY 1998 to capitalize on the successes of earlier efforts and their impact on local government. The program will address local government issues on a comprehensive and consolidated basis. Over the duration of the activity a sustainable, responsive and accountable local government system will be established in Kazakhstan.
The program strategy will build on the significant breakthroughs made in shifting control of major capital assets, such as housing, to city authorities and residents, thereby offering them real opportunities for personal empowerment and the exercise of democracy. Under the strategy local officials will be trained in new methods and techniques of understanding and solving problems, which will boost their ability to innovate and act as change agents, thus bringing more appropriate styles of governance and management to their localities.
Assistance will extend and deepen the reforms achieved by shifting housing management to residents. Owners' associations will be helped to broaden resident participation and self-sufficiency. As human capacity development is an essential ingredient in making the needed changes and adopting new techniques at the local level, priority will be given to launching a comprehensive, in-service training program. The emphasis will be on reaching a broad audience with training in critical skill areas, especially leadership and financial management.
Training will be followed by "extension services" in receptive municipalities to assist the trained officials to apply their skills and effectively introduce new practices in their work. "Best practices" of successful municipal management systems will be demonstrated to showcase the application of reform in the real world; key subjects will include budget and finance, and competitive public procurement from the private sector. In addition, members of the directly-elected city councils will receive training on their individual roles and the functions of city councils in democratic local governance.
Host Country and Other Donors: USAID will work closely with various Kazak entities involved in local government issues, including the Institute for Retraining Public Officials , as well as the parliament and local and national officials, both appointed and elected. Other donors also support activities with a local government dimension, including the World Bank, the Asian Development Bank, and EU.
Beneficiaries: Elected officials and government employees at the oblast and municipal levels will benefit directly. Private citizens of Kazakhstan also will benefit from the improved services that can be provided by stronger local government.
Principal Contractors, Grantees, or Agencies: To be determined. USAID plans to use existing assistance mechanisms or to procure services competitively, depending on which mode will most benefit the U.S. Government, cost and other factors considered.
Major Results Indicators:*
*This is a new strategic objective in FY 1998. Indicators and targets are now being finalized.
ACTIVITY DATA SHEET
PROGRAM: KAZAKHSTAN
TITLE: Improve the sustainability of social benefits and services, 110-S003.2
STATUS: Continuing
PROPOSED OBLIGATION AND FUNDING SOURCE: FY 1999: $2,510,000 FREEDOM Support Act
INITIAL OBLIGATION: FY 1993; ESTIMATED COMPLETION DATE: FY 2000
Purpose: Improved sustainability of social benefits and services.
USAID Role and Achievements to Date: USAID has been a key player since 1993 in the reform of Kazakhstan's health care system and housing sector. In the Zhezkazgan and Semipalantisk health demonstration areas, USAID has developed and implemented comprehensive models of health reform. By shifting resources and services to more cost-effective primary care, USAID has supported the creation of independent, community-based structures that are financed by market- based payment methods and are staffed by newly-trained family physicians. One hundred and fifty-five family group practices have been established and are fully operational in the two demonstration sites, covering nearly 85% of the population there. The strengthening of the primary care sector has been integrated with reforms at all levels of the health care system, including a new urban-based hospital payment system and rationalization of the hospital sector. Consumers now can exercise their right to choose the family practitioner of their choice. USAID health reforms in the demonstration sites are the basis for the national health reform policy dialogue. Following the merger of the Zhezkazgan and Semipalantisk oblasts, USAID and the Ministry of Health agreed to further their cooperation in health reform. Health reform working groups are now established and detailed plans for expanding health reform are in place. These work plans are expected to serve as the basis for a World Bank loan to institute the reforms in East Kazakhstan and Almaty Oblast.
With regard to housing, USAID has played a supportive role in an extensive set of new policy directives aimed at advancing reform in the shelter sector. For example, the government adopted a policy to eliminate generalized subsidies for utilities, in combination with a housing allowance program introducing targeted housing subsidies. USAID-funded advisors helped with the establishment of 56 allowance centers (from a base of only one in 1995). The national government allowed almost complete flexibility in promoting condominium development and housing allowance programs to the municipalities. This program is now complete; lessons learned and policy initiatives will be incorporated within the new local self-government program (SO 2.3).
Description: USAID plans to take the next step in improving the sustainability of social services by developing technical assistance and training interventions based on the combined lessons learned from demonstrations in local self-government and in the social sectors, e.g., housing and health. USAID will work at both the national and local levels in the areas of legal, regulatory, administrative, and technical reforms. Assistance will be provided to both government and non-governmental organizations. In the health sector, USAID will continue work with the Ministry of Health in the implementation of national health reform plans. USAID will continue to provide assistance in payment reforms and to make the new family group practices both operationally and economically viable. In addition, USAID will collaborate with the World Bank to roll out health reform to new oblasts.
Host Country and Other Donors: Various government ministries and other donors are involved in this crucial area, including the World Bank, WHO, United Nations Development Program (UNDP), UNICEF, United Nations Population Fund (UNFPA), and EU.
Beneficiaries: Immediate beneficiaries include owners of newly-privatized pharmacies, private practice physicians and their staffs, and new apartment owners. Ultimately, all citizens of Kazakhstan benefit, especially the vulnerable segment of the population, e.g., elderly pensioners, women, and children.
Principal Contractors, Grantees, or Agencies: Abt Associates, Inc. is working in the health reform area. The International City and County Managers Association is working in the housing sector.
Major Results Indicators: Baseline Target Number of independent primary care 0 (1994) 200 (2001) practices % of hospital and outpatient care 0 (1994) 80% (2001) reimbursed on incentive basis Demonstrations developed and 0 (1994) 2 (2001) rolled out, in newly-expanded oblasts
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