$1.1 Billion Pledged for Kyrgyzstan

    By Olga Dzyubenko
    Kyrgyzstan secured pledges worth $1.1 billion fr om international donors on Tuesday to help rebuild after the worst ethnic bloodshed in its modern history.
    The World Bank and other international bodies agreed to supply a combination of grants and favorable loans to the interim government of Kyrgyzstan, which expects its economy to shrink in 2010 after hundreds were killed in clashes last month.
    Kazakhstan has pledged to follow the Bishkek meeting with another donors conference in Almaty in August.
    "The amount pledged today by all participating donors is $1.1 billion over the next 30 months to the end of 2012," Theodore Ahlers, World Bank director of strategy and operations, said at a news conference in the Kyrgyz capital Bishkek.
    Acting President Roza Otunbayeva, who has led Kyrgyzstan since the overthrow of former President Kurmanbek Bakiyev in April, said the first $600 million would be disbursed as emergency aid during the remaining months of this year.
    At least 300 people were killed, and possibly hundreds more, during several days of violence last month in Kyrgyzstan, a former Soviet republic hosting U.S. and Russian military air bases and lying on a drug trafficking route out of Afghanistan.
    Thousands of homes were torched in the clashes between ethnic Kyrgyz and Uzbeks, forcing 400,000 people to flee at the height of the violence and leaving parts of the southern cities of Osh and Jalalabad in ruins.
    Otunbayeva said Kyrgyzstan's economy was likely to shrink by 5 percent this year, a sharp reversal of the 5.5 percent growth forecast before the turmoil that began with the April revolt.
    She said more than $350 million was needed to rebuild settlements in Osh and Jalalabad regions, plus a further $100 million to reignite the local economy in the south, $180 million for the energy sector and $50 million for food and agriculture.
    Aid would also be needed to plug a budget deficit estimated this year at 13.5 percent of gross domestic product, said Chorobek Imashev, finance minister in the interim government.
    Ahlers said the aid package would be supplied by the World Bank, the Asian Development Bank, the European Commission and the Eurasian Development Bank's Anti-Crisis Fund, as well as a number of countries.
    Kyrgyzstan is set to become the first parliamentary democracy in Central Asia, a region mainly run by presidential strongmen, after voters approved constitutional changes in a June 27 referendum. Elections are scheduled for October.
    "We've heard a strong and clear commitment to reshaping Kyrgyz institutions to ensure they are accountable, that they can deliver the rule of law and provide prosperity for all," said Kori Udovicki, U.N. assistant secretary-general and director of the U.N. Development Program for Europe and the former Soviet Union.
    Otunbayeva said some of the grants and loans offered for next year and 2012 would need to be ratified by parliament. She said the breakdown of aid between grants and loans was still a matter of negotiation.
    Imashev said Kyrgyzstan's external debt amounted to 61 percent of gross domestic product and could rise by a further 8 to 9 percentage points after the support package is finalized.
    Tensions persist in the south, wh ere human rights groups say residents face violence, interrogation and arrest. The Organization for Security and Cooperation in Europe will send an unarmed police force in August.
    "In terms of security, the risks are high and the capacity of the government to stabilize the situation is still not quite there," Udovicki said.
    The interim government has accused supporters of Bakiyev, the former president, of stoking the violence. Bakiyev, exiled in Belarus, has denied involvement, Reuters reports.