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Kazakhstan
FY 2001 Program Description and Activity Data Sheets
>> Regional Overview >> Kazakhstan Overview FY 2001 Program
USAID’s priority assistance areas are economic growth, civil society, information dissemination (including public exposure of corruption) and health reform. USAID will increase work at the local or micro level to begin to bring the benefits of macro-level policy, legal and regulatory reforms to local institutions and citizens. An example of this approach is the Atyrau Regional Initiative. It is a public-private partnership designed to increase investment in a region of Kazakhstan that has significant human needs, despite its gas and oil reserves.
Economic assistance will focus on improving the business environment, business-related education, tax and budgetary reform, and financial mechanisms such as insurance, mortgages and micro-credit. In democracy, assistance will support: citizen advocacy and lobbying, civic education, independent media, local government capacity building, and NGO sustainability.
In the social sector, USAID will continue to work with the Government on finding cost-effective market-oriented ways to provide essential health services. This will include adapting and building on the successful Kyrgyzstan model which integrates infectious disease control and family planning into independent family group practices. The IBRD loan will provide the capital necessary to replicate the models nationally. HIV/AIDS prevention activities will be introduced to fight the nascent epidemic. USAID will also work to strengthen NGOs working on health-related issues and to promote popular participation in health care. Health partnerships will support the transfer of technology in both academic institutions and primary care.
In FY 2000 and FY 2001, significant FREEDOM Support Act (FSA) funds will be provided, under the Administration’s Expanded Threat Reduction Initiative (ETRI), for programs designed to enhance border security and export control capabilities. ETRI assistance will contribute to the nonproliferation of weapons of mass destruction, and associated delivery systems, materials, technologies and expertise.
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ACTIVITY DATA SHEET
PROGRAM: Kazakhstan
TITLE and Number: Increased Soundness of Fiscal Policies and Fiscal Management Practices, 115-012
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $3,200,000 FSA
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $3,000,000 FSA
STATUS: Continuing
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2001Summary: Given the central role that fiscal management plays in overall macroeconomic stability and economic growth, clearly manifested in the development of the Russian economic and financial crisis, success in this objective is central to Kazakhstan’s hopes for sustained economic development. USAID began work on these issues in 1995. At that time, tax collections were about 11.5% of GDP, fiscal arrears were 6.2% of GDP and inflation was a resounding 60%. By 1998, tax collections were 12.5% of GDP, arrears had been slashed to a mere 2% of GDP and inflation was under control at 10%. As the lead donor in the field of fiscal policy, USAID’s efforts to achieve sound policies and management have contributed significantly to these results.
The direct beneficiaries of such improvements are the national and local government agencies that need tax revenues and sound budget policies and all entities with which the government is in arrears. Indirectly, all Kazakhstani citizens stand to benefit. Sound fiscal policies and management practices contribute to both short- and long-term economic stability and increase the potential for economic growth.
Key Results: Three key results are necessary to achieve this objective: 1) taxes that are more fairly and broadly applied and enforced; 2) clarified roles and responsibilities for different levels of government; and 3) position of primary fiscal manager and regulator shifts away from the government.
Performance and Prospects: Despite increased tax collection by mid-1999 – largely due to improved liquidity in the economy following currency devaluation – lack of secure financing for the budget continues to raise fears of currency and price instability. In September 1999, the government raised $200 million through a new five-year Eurobond issue, with a coupon of 13.6%. Although the Kazakhstan tax code, introduced in July 1995, is generally regarded as adequate, revenue pressures have led to cases of tax harassment. The tax police repeatedly resort to freezing enterprise bank accounts. Penalties can exceed 100% of the due tax sum, and the legislative base for tax appeals remains weak.
Nevertheless, USAID’s program is well on track. USAID’s role and achievements have been significant. Modifications to the Budget Systems Law in the first half of 1999 represented progress in the area of intergovernmental fiscal reform. In particular, progress was made in the area of expenditure assignments between central and local levels of government. In the area of Budget Management, progress has been noted as a result of the adoption of program budgeting. Over the past year, the Ministry of Revenues has agreed to a significant increase in its level of headquarters staff. Also, progress has been made in tax administration, including tax treaty administration and tax computerization. USAID-supported technical assistance has led to a World Bank loan of $17 million for tax computerization. At the local level, the USAID advisor in Atyrau is beginning to demonstrate success in improving municipal finance and budgeting.
With USAID assistance in 2001, stronger efforts are expected in the area of tax administration based on development of a tax auditing certification program, improvements in the presumptive taxation methodologies, and increased technical assistance in tax treaty administration. To the extent possible, USAID will continue to provide assistance to local and regional levels of government. For example, USAID is considering the expansion of this type of assistance to Shymkent. USAID will also work with the new Large Taxpayer Unit of the Ministry of Revenues. This unit was created in early 1999, with a primary objective being increased tax compliance from large taxpayers. There has, however, been criticism of this unit as unnecessary, unworkable, and contrary to confidentiality. USAID continues to assess the situation, while attempting to have the ministry and the private sector, particularly the Foreign Investors Council, work together on this difficult issue. Finally, USAID anticipates working closely with a new Debt Advisor from the U.S. Department of the Treasury.
Possible Adjustments to Plans: No change in strategy for this objective identified at this time.
Other Donor Programs: Ongoing efforts in the fiscal arena are coordinated with those of other donors, especially the International Bank for Reconstruction and Development (IBRD). USAID also collaborates with the International Monetary Fund and the European Union. The IMF has a three- year, economic program (Extended Fund Facility) with the government, but provides no technical assistance. IBRD is continuing with a major treasury modernization project that involves technical advisors, training and equipment. Meanwhile, the EU plans to provide limited technical assistance in tax administration. USAID technical advisors would play a key role in complementing these reforms.
Principal Contractors, Grantees, and Implementing Agencies: USAID activities are implemented through several USAID-funded contractors. KPMG/Barents works on fiscal reform, including budget, tax policy and administration and intergovernmental finance. The Academy for Educational Development coordinates participant training.
Selected Performance Measures:
Baseline (1995)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)
Government deficit as a percentage of GDP
3.0% 3.7% 5.2% 4.8% 4.41% Govt. of Kazakhstan maintains compliance with conditions of international financial institutions
Yes Yes Yes Yes Yes Tax revenues as a percentage of GDP
12.2% 12.2% 16% 17.5% 19%
ACTIVITY DATA SHEET
PROGRAM: Kazakhstan
TITLE AND NUMBER: Accelerated Development and Growth of Private Enterprises, 115-013
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $8,400,000 FSA
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $12,400,000 FSA
STATUS: Continuing
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2001Summary: A more vibrant private sector is the only hope for economic development in Kazakhstan. Private enterprise has recently stagnated. The private sector now confronts the effects of economic crises around the world, a general aversion of capital to the risks of emerging markets, low commodity export prices and a still difficult investment climate. In 1995, when USAID began work on this objective, 25% of GDP was generated by private enterprise. This percentage has since increased to 60% in 1998.
While steady progress toward achieving this objective occurred in 1999, substantial obstacles remain. There are numerous reasons: bureaucratic rent-seeking behavior by government officials, especially local ones; the sluggish progress in privatization of the largest enterprises; and the relative isolation of the country from major world markets. The primary impediments, however, continue to be over regulation and rent seeking by government, especially local government, and an overall environment which discourages competition.
Building the economic and legal framework for a market economy remains important, despite the recently slackening pace of transition. A combination of factors may soon force the government to allow freer development of private enterprise, particularly for the small- and medium-sized enterprises (SMEs). These factors include the lingering impacts of the Asian and Russian financial crises, the continuing low level of budgetary revenues – 12.5% per cent of GDP in 1999 - and the slow materialization of oil revenues.
The direct beneficiary of accelerated development and growth of private enterprise will be the entire private sector of Kazakhstan. All citizens would benefit indirectly.
Key Results: Three key results are necessary to achieve this objective: 1) an improved operating environment for private sector growth; 2) improved human resources; and 3) increased availability and accessibility of capital and technological resources for the private sector.
Performance and Prospects: An area of concentration for USAID is that of SMEs. According to official data, 87,000 enterprises with fewer than 50 employees were registered at the start of 1999. The contributions of SMEs to employment and output were estimated at 17% and 8% respectively for 1997. A government program approved in December 1998 provides for simplified registration and taxation practices, and the development of financial and information support institutions. Nonetheless, much remains to be done to improve the business environment, particularly for SMEs.
Private sector support represents by far the largest USAID activity in Kazakhstan. In the area of legal and regulatory reform, advisors are working in key areas, particularly in the promotion of trade and investment, and the identification and reduction of constraints to private enterprise. Pro-business laws covering bankruptcy, joint stock companies, foreign investment, and procurement have all been enacted with USAID support. USAID targets constraints to business operations by helping the government pass legislation in such areas as business inspection, business licensing and registration, work permits, contract law, and property rights. Many of these efforts are needed to expand opportunities for U.S. trade and investment.
USAID assistance is playing a critical role in moving the government to join the World Trade Organization. Kazakhstan has made progress in aligning its trade regime to the WTO requirements. This has been accomplished through enactment of WTO laws. People-to-people efforts and exchange programs have proven to be excellent vehicles to identify potential investment opportunities and develop appropriate business plans. The Central Asia-American Enterprise Fund (CAAEF) continues to provide equity and credit financing to Kazakhstani SMEs. In accounting reform, through USAID’s efforts, 1,400 enterprises have been converted to international accounting standards, while 4,000 accountants have been trained in the theory and practice of international accounting.
Through USAID's efforts, the Kazakhstan Community Loan Fund (KCLF) was established to provide for the first group-lending program in Kazakhstan. The KCLF is the first and only registered non-bank financial institution in Kazakhstan and has made over 7,000 loans to small enterprises with a delinquency rate of only 3%. Over 80% of KCLF’s clients are women, who, on average, borrow less than $200. Further, USAID linked SMEs with U.S. partners that provide strategic marketing advice. Finally, in 1999, USAID began to provide significant financial support to the Masters Degree in Economics Program of Kazakhstan Institute of Management, Economics, and Strategic Research, the premier institution in Central Asia for western training in economics and business administration.
Because it is expected that the government will continue to pursue accession to the WTO at the same pace, no major changes are expected in this area. USAID will increase efforts to reduce and remove constraints to business, particularly at the local level.
While support for enterprise reform will continue to focus mainly on areas such as accounting reform, USAID will begin to provide more assistance directed at individual companies. This will complement the work on curriculum reform, i.e., introducing undergraduate and graduate-level degree programs in business administration. The KCLF is in the process of expanding its successful micro-credit operation to Shymkent. USAID anticipates new activities in economic and business education in 2000 and 2001.
Possible Adjustments to Plans: No change in the strategy for this objective has been identified at this time.
Other Donor Programs: Efforts to strengthen private business operations are being developed in conjunction with the World Bank (IBRD), European Bank for Reconstruction and Development, United Nations Development Program, and the European Union (EU). The EU also has a special interest in the agricultural sector. An IBRD project on enterprise support is now being developed, as is a project in industrial restructuring by the EU. EBRD programs include a loan program for SMEs comparable to that of CAAEF.
Principal Contractors, Grantees, and Implementing Agencies: USAID activities are implemented through several U.S. firms, including Booz Allen & Hamilton which does trade and investment reform in preparation for WTO accession. The Carana Corporation works on accounting reform and training of sustainable accounting and auditing professional associations. Associates in Rural Development/Cheechi works on commercial law. U.S. private voluntary organizations include the International Executive Service Corps that provides technical, managerial, and business-planning assistance to private enterprises. The Agricultural Cooperative Development International’s, Volunteers in Overseas Cooperation Assistance provides loans to micro-enterprises. CAAEF provides loans to micro-, and small-, medium- and large-sized private enterprises. The Academy for Educational Development coordinates participant training.
Selected Performance Measures:
Baseline (1995)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)
Share of GDP generated by private sector
24.5% 55% (estimate) 65% 70% 75% Number of firms transferred to new accounting standards (annually)
0 1369 600 1000 1500 GOK maintains adherence to conditionality of international financial institutions
Yes * * * * *During FY 1998, USAID programs were being consolidated and a new strategy was being developed. Decisions were made about the relevance of the indicators for the program. Data were not collected on this indicator subsequently.
ACTIVITY DATA SHEET
PROGRAM: Kazakhstan
TITLE AND NUMBER: A Competitive Private Financial Sector that is More Responsive to the Needs of a Market-Oriented Economy, 115-014
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $1,300,000 FSA
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $1,100,000 FSA
STATUS: Continuing
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2001Summary: To enhance financial sector intermediation, people need adequate and secure opportunities to deposit their savings while borrowers need mechanisms to obtain those savings for use in productive investments. In Kazakhstan, USAID seeks to create a more competitive and market-responsive private financial sector by reforming the pension system, bringing stability to the banking sector, and developing a vibrant securities market.
Direct beneficiaries include professionals involved in financial market development; e.g., private bankers, stock brokers, and registered private enterprises. Indirect beneficiaries include those who will benefit from having a more secure banking system in which to deposit their savings. The increased savings can then be channeled into other types of investments, resulting in improved economic activity.
Key Results: Two results are necessary to achieve this objective: 1) government regulatory agencies supervise, administer and enforce legislation; and 2) more forms of financial intermediation are institutionalized and effectively supply the private sector on a competitive basis.
Performance and Prospects: The April 1999 devaluation of the tenge included an offer to convert all household bank deposits and 30% of all enterprise deposits into dollars at the pre-devaluation exchange rate, if they were kept frozen for nine and six months respectively. The stock market remains illiquid, despite increased capitalization. At the end of 1999, 65 companies traded on the stock exchange. Capitalization grew to $1.83 billion, but trading of shares remained low $43 million.
Through bank supervision and bank accounting reform, USAID has helped to tighten financial regulatory guidelines, enhance monitoring capacity, and improve financial transparency; thereby increasing the stability of the banking sector. In addition, USAID’ bank accounting project facilitated financial monitoring by the central bank and introduced international accounting standards (IAS), furthering efforts to increase transparency in the banking sector. USAID’s performance in the banking sector in 1999 was notable. USAID advisors continued to participate in on-site bank examinations with National Bank of the Republic of Kazakhstan (NBRK) inspectors.
During 1999,approximately 60% of all banking assets held by banks were recorded using IAS. This positive trend toward transparency enables the NBRK to more readily track the banks’ financial performance, and affords foreign investors with access to standardized financial statements. It is expected that continued progress would be made in this area, with more than 100% of assets recorded under IAS by 2000. During late 1999 and early 2000, the NBRK has taken steps to increase confidence in the banking system by adopting a deposit insurance scheme, while also backing legislation that limits the ability of the Government of Kazakhstan to seize assets.
USAID has assisted with capital market development by creating an independent, National Securities Commission; developing a trading infrastructure in the Kazakhstan Stock Exchanges (KASE), which includes an over-the-counter market; and promoting share registries and depositories. USAID has supported the formation of self-regulatory organizations. Through USAID’s efforts, the capital markets institutional infrastructure is in place, including the KASE, a self-regulatory association, the National Securities Commission, the Central Depository, and custodians and registrars.
Since 1996, USAID has led the way in pension reform. The potential benefits for citizens and the economy are tremendous for many reasons. Besides increasing the pool of capital available for investment, economic security for the elderly and individual choice for citizens, pension reform contributes to long-term fiscal stability. USAID worked closely with the GOK in drafting a new Pension Fund Law that went into effect in 1998. USAID advisors assisted the government in creating a State Center for Benefits Payments and the National Pension Agency. The pension system continues to require further development. The private pension funds, as well as the regulatory body, lack experience and maturity. A key issue being addressed in 2000 is the creation of a unified, independent regulatory body for the pension system.
In 2001, USAID will continue to promote financial sector reform in the major areas of bank reform and restructuring. USAID’s thrust will be to make the financial system more participatory and open to citizens. Practical, on-the-job training be a special emphasis of the program. High-level policy advice will be accompanied by efforts to ensure that counterparts develop the capacity to undertake needed research and analysis on their own.
Possible Adjustments to Plans: By 2001, USAID will complete the Capital Markets Development and Pension Reform projects. Given the record of accomplishments to date, bank accounting and banking supervision efforts will also be scaled back. In 2001, based upon a request from the head of the central bank, a leader in economic reform, USAID will begin new activities to develop an insurance industry and a mortgage industry.
Other Donor Programs: USAID is the major donor working in the financial sector, and the only one involved in securities. Work is coordinated with the IBRD. Training activities for private banks, currently undertaken jointly by USAID and European Union, will soon be assumed by a single institution. This training should set the standard for banker training in Central Asia. In the area of pension reform, USAID collaborates with the International Bank for Reconstruction and Development and the Asian Development Bank, each of which have extended large loans to Kazakhstan to finance the transition costs associated with the new pension system. Both donors also have limited technical assistance efforts in the pension area.
Principal Contractors, Grantees, and Implementing Agencies: USAID activities are implemented through several U.S. firms. International Management Communication Corporation works on pension reform. Pragma and KPMG/Barents provide assistance in capital markets development. The Financial Services Volunteer Corps works on payment system development. All work in cooperation with local counterparts at the central bank, the Ministry of Finance, the Kazakhstan Stock Exchange and the National Securities Commission. The Academy for Educational Development coordinates participant training.
Selected Performance Measures:
Baseline (1995)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)
Bank deposits as a percentage of GDP
4.9% 7.0% 9.0% 12.0% 15.0% Number of companies listed on stock exchange
12 8 100 150 300 Types of financial institutions*
* * * * *
Percentage of banks meeting capital adequacy requirements*
* * * * * Number of private pension funds 0 7 9 15 18 *During FY 1998, USAID programs were being consolidated and a new strategy was being developed. Decisions were made about the relevance of the indicators for the program. Data were not collected on these indicators subsequently.
ACTIVITY DATA SHEET
PROGRAM: Kazakhstan
TITLE AND NUMBER: Increased Citizens' Participation in Political and Economic Decision-making, 115-021
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $3,000,000 FSA
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $3,000,000 FSA
STATUS: Continuing
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2006Summary: For Kazakhstan to successfully make the transition to democracy, citizens must participate in economic and political decision-making. USAID supports improvements in the legal and regulatory environment for the NGO sector. Concurrent support enhances professionalism and management skills for NGOs, and works to enable NGOs to provide services and to effect needed social change. In addition, USAID supports independent broadcast media, thereby increasing the availability of information, and provides programs aimed at increasing government responsiveness. USAID believes that these activities will help bring about a society in which citizens promote their interests to a responsive government that is held accountable by NGOs and the media.
Key Results: Three key results are necessary to achieve the desired increase in citizen participation. (1) NGO participation in civil society must be strengthened. (2) Information on domestic economic policies and politics must become readily available. (3) The government must become more responsive and accountable to citizens and citizen organizations.
Performance and Prospects: Performance over the last year has been satisfactory, with the exception of setbacks in the elections arena associated with the suppression of opposition groups and independent media. The Organization for Security and Cooperation in Europe (OSEC) cited violations in the recent parliamentary elections.
A number of fervent protests (e.g., several hunger strikes held by workers and women concerning salary payment arrears) throughout Kazakhstan over the past year indicate that people are becoming more vocal about their social-economic status, and want to be more involved in the decision-making process. With the help of grants and training from USAID, NGOs in Kazakhstan are developing a strong network, supported through 30 newsletters and seven associations, and are increasingly involved in advocacy. Efforts are being made, with the coordination of other donors, to help NGOs and Parliamentarians draft and present more effective NGO and domestic violence legislation. For example, representatives of the media community and a number of NGOs participated in a public hearing on the draft NGO legislation. USAID/CAR-supported efforts to provide commentary and suggested revisions to the recently adopted Law on Mass Media opened a dialogue, albeit constrained, between journalists and the GOK. Nevertheless, non-state media outlets continue to be pressured by the government. Notwithstanding the above, USAID assistance for journalists’ training and station management is sought after more than ever, indicating a great desire for media personnel to continue to develop their skills.
As a result of the flawed 1999 presidential and parliamentary elections, USAID democracy programming may face particular challenges for continued openings in the electoral process, the independence of the media, and the participation of opposition groups.
In FY 2001, USAID will begin localizing its civil society activities and intends to expand the media program to include increased media advocacy efforts and other forms of information dissemination. In addition, activities are underway to support the Atyrau Regional Initiative by strengthening the advocacy role of environmental NGOs in Kazakhstan.
Possible Adjustments to Plans: No strategic changes identified at this time.
Other Donor Programs: USAID’s efforts in developing civil society are part of a multi-donor effort. UNDP’s center for the promotion of NGOs is in full operation and has been organizing seminars bringing together donors and NGOs. For example, this center supported USAID’s efforts to encourage Parliament to adopt improved NGO legislation. The Soros and Eurasia foundations support NGOs through their grant programs. In the electronic media area, the OSCE is increasing developmental efforts with media outlets in the country. The Soros Foundation made a grant to Internews to publish textbooks for journalists. Soros also promotes civic education through its debates program. The United Nations Development Program (UNDP) supports the Parliament in various ways, and works with the American Bar Association’s Central and Eastern European Law Institute to establish a legislative drafting center. Election assistance is coordinated through a donor coordination group which includes USAID, UNDP, Soros, European Union, Konrad Adenaur Foundation and various embassies.
Principal Contractors, Grantees, Implementing Agencies: Several USAID-supported American NGOs, such as the American Bar Association/Central and East European Law Initiatives, Internews, the National Democratic Institute, and the International Foundation for Electoral Systems, are playing a role in promoting democracy in Kazakhstan. Counterpart International, Aid to Artisans, and the International Center for Not-for-Profit Law, which together form the Counterpart Consortium, also participate in local NGO development. The NGO, Initiative for Social Action and Renewal in Eurasia, will also participate in the development of local environmental NGOs. The Academy for Educational Development coordinates participant training.
Selected Performance Measures:
Baseline (1996)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)
Number of NGOs involved in advocacy (media/government officials)
75/35 354/143 200/100 400/200 95/85 Average daily minutes of local news Programming
15 25 30 33 35 Number of Parliamentary hearings and committee meetings addressing legislative policy issues* 2 * * * * * During FY 1998, USAID programs were being consolidated and a new strategy was being developed. Decisions were made about the relevance of the indicators for the program. Data will not be collected for this indicator subsequently.
ACTIVITY DATA SHEET
PROGRAM: Kazakhstan
TITLE AND NUMBER: More Effective, Responsive, and Accountable Local Government, 115-023
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $1,600,000 FSA
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $2,000,000 FSA
STATUS: Continuing
INITIAL OBLIGATIONS: FY 1998 ESTIMATED COMPLETION DATE: FY 2004Summary: The governmental structure of Kazakhstan is centralized and top-down. The President appoints regional governors, who in turn appoint the mayors of towns and cities. Popularly elected councils have some authority over governors and mayors. The government has delegated increased responsibility to its appointed local officials to administer health, education and other services, but has not given them the authority to raise adequate revenues. The growing need to cut national expenditures, however, has prompted the government to rethink the budget process. Done systematically, it could result in meaningful local government restructuring.
It is critical to lay the groundwork for real local government by strengthening the institutional capacity of selected municipal governments. The desired effect is to increase pressure on the national and oblast levels to devolve greater programmatic and fiscal authority to municipal governments. A twin objective is to engage elected councils and local NGOs in local governmental affairs in order to make greater use of two of the few institutions that citizens have for communicating their priorities to governing officials.
Direct beneficiaries are the local government officials. The indirect beneficiaries are the citizens of the municipalities. Local government reform has the potential to improve the quality of everyday life and to increase citizens’ involvement in public affairs. Increasing access to potable water, improving health services, and encouraging local civil society and economic development are diverse areas that will benefit from more effective and responsive local governments.
Key Results: The three results necessary to the achievement of this objective are: 1) increased citizen participation; 2) strengthening of local governments' institutional capacity; and 3) increased autonomy of local government vis-a-vis the national and regional levels.
Performance and Prospects: The notable achievements in the past year include the adoption of public budget hearings as a vehicle for citizen participation in Pavlodar and Aktau and the official development, training, and use of competitive procurement standards by the Agency for Procurement. Although FY 1999 targets were met, implementation lagged at times due to the high turnover in contracting personnel. The municipal mayors of Pavlodar and Atyrau, the model sites of the local government initiative, are strong counterparts. Pavlodar is adopting program budgeting with USAID assistance, which in turn allows USAID to strengthen its health finance and fiscal reform objectives. Atyrau is particularly focused on the need to restructure its water supply system in order to meet World Bank loan conditions. USAID helped local governments prepare for public hearings and stringent citizen outreach on the required rate increases. USAID will assist with estimating sustainable utility rates.
The most successful component is the training program, which is conducted by local trainers, drawn from the Academy of Civil Service, the Pavlodar Academy of Civil Service, and other public and private training institutions. The training helps strengthen the political skills of elected council members and the budgeting and management skills of officials in model regions, cities and districts. It also serves as a vehicle for dissemination. The sudden interest in public hearings, which sprang up following the Pavlodar hearing in June, is being nurtured by one-day "how to" workshops. These workshops have been conducted in numerous, interested cities. The academies' strong interest in the training bodes well for its future adoption in Government of Kazakhstan-funded training. National government policy makers participated in a study tour to the United States, and in December 1999 they and representatives from other ministries participated in a seminar on decentralization. These programs provided the groundwork to pursue an integrated, interdisciplinary approach to reform.
In its second year, the initiative is building on the momentum created by the well-received training program and the technical assistance efforts initiated in Atyrau and Pavlodar. A partnership is being developed between the Atyrau Office of Economic Development and its counterpart in Tucson, Arizona.
Possible Adjustments to Plans: No strategic changes identified at this time.
Other Donor Programs: Other donors also support activities with a local government dimension, including the World Bank, European Union, and European Bank for Reconstruction and Development (EBRD). The Technical Assistance for Commonwealth of Independent States program, which supported civil service reforms, is winding down. The EBRD's interest in extending a non-sovereign-guaranteed loan to the City of Almaty creates a valuable opportunity to promote transparency in public financial management through a creditworthiness assessment, which USAID is assisting with.
Principal Contractors, Grantees, and Implementing Agencies: International City/County Management Association. The Academy for Educational Development coordinates participant training.
Selected Performance Measures:
Baseline (1998)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Number of cities adopting practices promoting citizen input and involvement
0 1 1 2 2 Percent of cities adopting practices improving delivery of services and management of resources
0 1 1 2 2 Increasing the powers of local Government 0 0 1 2 3
ACTIVITY DATA SHEET
PROGRAM: Kazakhstan
TITLE AND NUMBER: Improve the Sustainability of Social Benefits and Services, 115-032
PLANNED FY 2000 OBLIGATION AND FUNDING SOURCE: $3,574,000 FSA
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $7,500,000 FSA
STATUS: Continuing
INITIAL OBLIGATION: FY 1993 ESTIMATED COMPLETION DATE: FY 2004Summary: The social service system that Kazakhstan inherited was unsustainable and inefficient. Nearly 80% of the health care budget was consumed by inpatient care in a costly network of specialized health care institutions and hospitals. Improving sustainability of service is critical in implementing health reforms that utilize market-based approaches to health care financing and delivery. USAID assistance is improving access to primary health care through the establishment of low cost, efficient, community-based Family Group Practices (FGPs). This involves the consolidation of underutilized inpatient facilities and the establishment of necessary financial systems.
USAID began health care reform implementation in two demonstration sites, Semipalatinsk and Zhezkazgan Oblasts. Since the restructuring of the health care system in Zhezkazgan has proved successful, Kazakhstan has a viable primary health care model that can be replicated nationwide. In 1999, USAID plans to develop a phased approach for nationwide implementation, in order to ensure accurate duplication of this model. The FGPs are the first points of contact for populations at the local level. The number of FGPs will be increased to meet basic health care needs. USAID efforts have leveraged a World Bank loan for $150 million over a ten-year period to assist Kazakhstan with health reforms.
USAID continues to support targeted health initiatives to improve reproductive health and infectious disease prevention and control. These efforts are structured to supplement overall USAID work on health reform. The introduction of the new tuberculosis treatment regimen, a modern World Health Organization (WHO) recommended approach, will fundamentally change the way the Ministry of Health treats tuberculosis patients.Through health partnerships, modern treatment practices have been introduced for women’s health. As FGPs are established nationwide and the primary health care system becomes operational, the special initiatives efforts will become part of a comprehensive package of services at the FGP level. Successes in decentralizing the health finance systems were instrumental in designing the programs for local government accountability. All citizens of Kazakhstan benefit from this assistance, especially the vulnerable populations.
Key Results: The two key results needed to achieve this objective are: 1) cost-effective health care services demonstrated in selected oblasts; and 2) cost-effective health sector reforms adopted nationally.
Performance and Prospects: USAID has been a key player since 1993 in the reform of Kazakhstan’s health care system. In the Zhezkazgan and Semipalatinsk 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. FGPs have been established and are fully operational in the two demonstration sites, covering approximately 85% of the population. USAID helped establish a new case-based hospital payment system. Consumers can now exercise their right to choose the family practitioner of their choice. The Health Decree requiring nationwide replication of health reform causes some concern because of limited technical assistance. A $42.5 million World Bank health sector loan was finalized which provides the capital to establish FGPs and restructure the health care system over a ten-year period. In addition, under the first phase of the loan, USAID will intensively train family practitioners. Prospects are excellent for USAID to continue work during the first phase of the loan.
Possible Adjustments to Plans: Integration of vertical health programs (i.e., infectious diseases, and reproductive health) into the Family Group Practice health delivery structure will become a main objective.
Other Donor Programs: Various government ministries and other donors are involved in this crucial area, including the World Bank, World Health Organization, United Nations Development Program, UNAIDS, UNICEF, United Nations Population Fund, and European Union.
Principal Contractors, Grantees, Implementing Agencies: Abt Associates is currently the principle contractor working to implement this activity. The Academy for Educational Development coordinates participant training.
Selected Performance Measures:
Baseline (1993)
Actual
(1998)Target
(1999)Target
(2000)Target
(2001)Number of independent primary care practices (Family Group Practices) pilot/nationwide
0 120/31 91/37 300 550 Percent of health care providers reimbursed by market-oriented payment pilot/nationwide
0 64%/22% 66%/32% 75% 80% Percentage of the population openly enrolled in FGPs in pilot sites 0 85% 85% 85% 95%
EXPLANATION FOR SPECIAL INITIATIVES and CROSS-CUTTING PROGRAMS
Title: Special Initiatives, 115-041
Planned FY 2000 Obligation and Funding Source: $19,746,000 FSA
Proposed FY 2001 Obligation and Funding Source: $15,800,000 FSASummary: This objective includes all of the 632 allocations and transfers to other USG entities. The majority of funding in this objective goes to the State Department for public diplomacy, humanitarian transport, international narcotics and law enforcement programs. Other recipients include the Department of Commerce and the National Science Foundation.
USAID activities under this objective meet criteria outlined in Agency guidance for special objectives or interests. That is, they are of limited scope and/or duration and respond to particular windows of opportunity. For USAID/Kazakhstan, these activities generally support health care improvement.
Title: Cross-cutting Programs, 115-042
Planned FY 2000 Obligation and Funding Source: $2,900,000 FSA
Proposed FY 2001 Obligation and Funding Source: $3,500,000 FSASummary: This objective is designed to accommodate activities that make significant contributions to more than one objective. The activities included in this objective for Kazakhstan are the exchanges and training program, the Eurasia Foundation and program development and support activities.
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Last Updated on: February 01, 2001 |
