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Support to the Education Sector in the Kyrgyz Republic

The Kyrgyz Republic, like most former Soviet Republics, suffered a severe economic collapse following the break-up of the Soviet Union. The majority of the large state owned enterprises became de facto bankrupt as a result of the loss of access to their previous supply and market chains. The resultant unemployment further reduced demand in the economy, leading to a diminished money supply, falling public revenues and spiralling public debt. Poverty grew in absolute and relative terms, particularly in the smaller towns and the rural areas. The need to provide financial support for their families led many to migrate in search of work to, inter alia, the Russian Federation, Kazakhstan, Turkey and EU Member States.

 

With the help of the international community, the Government managed to arrest the decline. By successfully applying tight monetary policy and fiscal restraint, Kyrgyzstan managed to maintain macro-economic stability for a number of years, although the average annual rate of GDP growth remained comparatively low [4%]. However, the global economic crisis has hit Kyrgyzstan hard. The Ministry of Finance has revised the Medium Term Budget Forecast downwards and now expects GDP growth to slow to 1.5% in 2009 and remain relatively stable around 2-3% between 2010 and 2012. Remittances from labour migrants have fallen sharply and this, together with rising unemployment, is taking purchasing power out of the economy. Revenues from transit trade have dropped significantly and there are also concerns about the stability of the Kyrgyz banking sector in light of the crisis in Kazakhstan. Inflation is predicted to rise by an annualised rate of 12%, although anecdotal evidence suggests that inflation in food stuffs and communal services is already much higher. Kyrgyzstan’s hard earned macro-economic stability is therefore under threat and there are concerns that the Government may be forced to default on its external debts. The percentage of the population experiencing absolute and relative poverty, which had declined in recent years, is almost certain to rise again in light of the fall off in remittances and growing unemployment.

 

In 2008, the Kyrgyz Government adopted a revised Country Development Strategy 2009-11 (CDS). However, the strategy was predicated on the assumption that annual GDP growth would be between 7.5% and 8%. The Government is reported to be working on an interim strategy, 2010 – 2013, while also preparing a new CDS covering the period 2011-2020. The current CDS establishes as its principal objective, sustainable and equitable economic development, and identifies three priorities: the introduction of good governance, further development of the private sector and rehabilitation of the social and technical infrastructure. The CDS emphasises the importance of an efficient and effective education system as a precondition for sustainable economic growth and for ensuring competitiveness within the global economy. However, the document is critical of the current state of the education system and in particular draws attention to the lack of synergy between the education system and the labour market. The CDS highlights the need to increase the efficiency and quality of primary and secondary education, reform the vocational education system, enhance the skills of the schools/college management and the teaching staff and revise the curriculum to make it more relevant, flexible and less burdensome on the student. The CDS also indicates that there will be a move to a more results-oriented management system, the introduction of a per capita financing system and an effort to introduce more market mechanisms into the design and delivery of education and training.

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