1

EN

THIS ACTION IS FUNDED BY THE EUROPEAN UNION

ANNEX

of the Commission Implementing Decision on the

financing of the annual action programme in favour of the Kyrgyz Republic for 2020 part 2

Action Document for “Digitalisation Sector Reform Performance Contract

in the Kyrgyz Republic”

ANNUAL PROGRAMME

This document constitutes the annual work programme in the sense of Article 110(2) of

the Financial Regulation and action programme/measure in the sense of Articles 2 and 3

of Regulation N° 236/2014.

1. Title/basic act/

CRIS number

Digitalisation Sector Reform Performance Contract

in the Kyrgyz Republic, CRIS number: ACA/2020/042-335

financed under the Development Cooperation Instrument

2. Zone benefiting

from the

action/location

Central Asia, The Kyrgyz Republic

The action shall be carried out at the following location:

Nationwide

3. Programming

document Multi-Annual Indicative Programme (MIP) for the Kyrgyz Republic

2014-2020, AAP 2020, as amended following the Mid-Term Review1

4. SDGs The nature of the action has a potential to impact all SDGs but it will

primarily contribute to achieve:

- SDG 16: Promote peaceful and inclusive societies for

sustainable development, provide access to justice and build

effective, accountable and inclusive institutions at all levels;

- SDG 4: Ensure inclusive and equitable quality education and

promote lifelong learning opportunities for all;

- SDG 5: "Achieve gender equality and empower all women and

girls";

- SDG 9: Industry, innovation, and infrastructure;

- SDG 10: Reducing inequality.

5. Sector of

intervention/

thematic area

Focal Sector 2- Education but also

addressing digital issues of the

Rule of Law (Focal sector 1) and

Integrated Rural Development

(Focal Sector 3)

DEV. Assistance: YES

6. Amounts Total estimated cost: EUR 21 760 000

1 https://eeas.europa.eu/sites/eeas/files/mip-2014-2020-kyrgyzstan-20140814.pdf

2

concerned Total amount of EU budget contribution EUR 21 760 000 of which

EUR 18 000 000 for budget support and

EUR 3 760 000 for complementary support, including evaluation,

twinning, procurement, audit and visibility actions.

7. Aid

modality(ies)

and

implementation

modality(ies)

Direct management through:

- Budget Support: Sector Reform Performance Contract

- Grants: Twinning modality

- Procurement

8 a) DAC code(s) 11120 Education facilities and training

22010 Communications policy and administrative management

22040 Information and communication technology (ICT)

25030 Business development services

b) Main Delivery

Channel

12000 Recipient Government - Budget support

13000 Third Country Government/EU Members States – Twinning

60000 Private Sector Institution – Procurement

9. Markers

(from CRIS DAC

form)

General policy objective Not

targeted

Significant

objective

Principal

objective

Participation development/good

governance ☐ ☐ ☒

Aid to environment ☒ ☐ ☐

Gender equality ☐ ☒ ☐

Trade Development ☒ ☐ ☐

Reproductive, Maternal, New born

and child health ☒ ☐ ☐

Disaster Risk Reduction ☒ ☐ ☐

Inclusion of persons with

disabilities ☐ ☒ ☐

Nutrition ☒ ☐ ☐

RIO Convention markers Not

targeted

Significant

objective

Principal

objective

Biological diversity ☒ ☐ ☐

Combat desertification ☒ ☐ ☐

Climate change mitigation ☒ ☐ ☐

Climate change adaptation ☒ ☐ ☐

10. Internal

markers Policy objectives Not

targeted Significant

objective Principal

objective Digitalisation ☐ ☐ ☒

Migration ☒ ☐ ☐

11. Global Public

Goods and

Challenges (GPGC)

thematic flagships

N/A

SUMMARY

3

The proposed action will provide support to the Government of the Kyrgyz Republic, through

policy dialogue, budget support and capacity building measures, to assist with the

implementation of the government’s Digital Concept and the related Kyrgyz Digital

Transformation Roadmap 2019-2023. The digital transformation has been prioritised in the

country policy and funding since 2019 as catalyst for accelerating and promoting sustainable

development and timely achievement of the Sustainable Development Goals (SDGs).

The overall objective of the proposed action is to reduce the unemployment and inequality and

strengthen the good governance in the country The action focuses on three major priorities: (i)

improving employability of workforce with digital skills; (ii) Improving access to public and

private services (transparency and inclusiveness); (iii) promoting data protection, privacy and

cybersecurity and protecting human rights.

The intervention is suggested as a Sector Reform Performance Contract enabling the EU to

engage in high-level policy dialogue to support reforms. The budget support will be

accompanied by complementary measures that include: (i) twinning modality to help the

Government to strengthen its capacity through the technical assistance based on EU best practice

and (ii) procurement of services to equip project partners and stakeholders with necessary skills

and knowledge enabling to implement and participate in the emerging sector reforms.

1. CONTEXT ANALYSIS

1.1 Context Description

The Kyrgyz Republic is a mountainous, landlocked country of about 6 million people, with rich

energy potential and proximity to big markets. There is a democracy with open institutions, but

susceptible to social upheavals and tensions from an urban/rural and north/south divide. Since

the collapse of the Soviet Union and the structural transformations that ensued, economic

activity in the Kyrgyz Republic has relied on drivers that represented ad hoc adaptations to the

key constraints of weak governance, poor connectivity, and a limited industrial base.

The Kyrgyz Republic has a relatively good record in terms of democracy and civil society

development. In September 2017, the Kyrgyz Republic joined the global Initiative – Open

Government Partnership (OGP), a multilateral initiative that aims to secure concrete

commitments from the respective governments to promote transparency, empower citizens, fight

corruption, and harness new technologies to strengthen governance and human rights protection

and improve public policy and government effectiveness in the country. The Kyrgyz Republic

has developed a National Action Plan, which includes appropriate commitments on furthering

transparency, accountability, and public participation.

In the last decade, the Kyrgyz government has introduced numerous reforms. Two important

strategic planning processes finalised in 2018 have shaped the country’s development vision: the

National Sustainable Development Strategy (NSDS) of the Kyrgyz Republic for 2018-2040,

followed by wide national consultations to determine details of implementation of the strategy.

The National Development Programme for 2018-2022, “Unity, Trust, Creation” serves as a

medium-term implementation programme for the 2040 strategy. Through these processes, the

Kyrgyz Government has demonstrated its commitment to the implementation of SDGs.

4

In this context, the EU wishes to promote connectivity with partners in Asia2 in the spirit of

cooperation and mutual benefit. Better connectivity will create new opportunities for citizens and

businesses and open new avenues for higher living standards, the realisation of human rights,

political dialogue and civil society ties. Furthermore, it is largely recognised that digital

innovation could bring new solutions to local problems. Donors support towards the digital

sector can include support to attract investment to build infrastructure (for example, the World

Bank’s regional Digital CASA (Central Asia, South Asia) programme for the Kyrgyz Republic

includes components designed to catalyse private investment in regional broadband connectivity

and data infrastructure. So as not to overlap with the ongoing Digital CASA programme, and at

the same time to benefit from its outcomes, support in this work programme will focus on

providing assistance for digital policy and regulatory frameworks and digital capacity building to

reinforce an enabling environment for digital development.

The proposed intervention is well aligned with the Political Guidelines recently put forward by

the Commission’s President for the next five years, where transition to a new digital world is

amongst six headline ambitions.

While the commitments and objectives of the Kyrgyz digital transformation programme aim at

bringing universal access to information, build effective and transparent public administration,

reduce corruption, and strengthen data protection and cyber security, the commitment to

ensuring a strong human rights perspective in the digital reform agenda is necessary. Focusing

on human rights compliance and protections of e-government platforms is an important area, as

digital reforms without human rights may lead to the further marginalization of certain groups;

strengthening control functions of the authorities, violations of the right to privacy and data

protection and undermine child rights.

1.2 Policy Framework (Global, EU)

Russia remains the country's main international partner, with China's role increasing. The EU's

role is not equal to these two neighbours, however, the Kyrgyz leadership values the political

recognition and the economic benefits which good relations with the EU can bring and is

interested in sustaining it.

Some of today's developments in Central Asia have further opened up new opportunities for

taking the EU-Central Asia partnership forward3. In line with the Strategy on Connecting Europe

and Asia4 and using existing frameworks of cooperation, the EU considers, where appropriate, to

establish partnerships on sustainable connectivity, which also includes digital connections,

following market principles, guaranteeing transparency and based on international standards.

The Kyrgyz Republic has declared as its foreign policy priority ambition to pursue international

connectivity and utilise its geographical position as a 'bridge between the East and West'.

Meanwhile, the mountainous and landlocked Kyrgyz Republic has enormous connectivity needs.

China is gradually stepping in as a major provider of hard infrastructure. China's Belt and Road

Initiative is seen as attractive, however presenting risks, linked to debt, social values, corruption

as well as some rejection by public opinion.

Under these circumstances, the promotion of the EU's approach to sustainable, transparent and

comprehensive and rules-based connectivity should be further advanced.

2 Connecting Europe and Asia – Building blocks for an EU Strategy – Council conclusions, 13097/18 of 15 October 2018

3 Joint Communication to the European Parliament and the Council/The EU and Central Asia: New Opportunities for a Stronger

Partnership, published in July 2019 4 Connecting Europe and Asia – Building blocks for an EU Strategy – Council conclusions, 13097/18 of 15 October 2018

5

The Joint Communication "Connecting Europe and Asia – Building Blocks for an EU

strategy", provides a key element of the policy framework for EU engagement, which will be

coordinated with the following strategies and policies already in place or in preparation.

As for digitalisation, the new European Consensus on Development5 and the European

Commission’s Approach to “Digital4Development- mainstreaming digital technologies and

solutions in EU development policy”6 acknowledge the enabling role played by digital

technologies and solutions to contribute to the implementation of the 2030 Agenda on

Sustainable development and the SDGs. These policy documents lay down the EU ambition to

promote worldwide a peaceful, secure and open ICT environment, while addressing

cybersecurity threats and protecting human rights and freedoms offline and online,

including providing the highest standards for data privacy, protection and security. In this

context, reference needs to be made to the General Data Protection Regulation (GDPR), the

Free Flow of Non-personal Data Regulation, the European Commission’s proposal for a

Regulation on Privacy and Electronic Communications (which aims to update the EU’s

legal framework for ePrivacy), the Directive on security of network and information

systems (NIS Directive) and the international Budapest Convention on Cybercrime, which

are key part of the EU policy framework of reference.

With digital policy as a priority of the Von der Leyen Commission, it has become even more

relevant for the EU to project its best practises, experience, expertise and, industrial and research

excellence onto the global stage. This means concrete support to enable partner countries of

developing and aligning their policy and regulatory framework and building an enabling

environment to the needs of a fair, diverse, democratic and confident digital transformation.

The comprehensive Digital Package, comprising three key documents7, fosters a human centric

approach8 to data and technology, which ensures a fair and competitive digital economy, and an

open, democratic and sustainable society. The EU also wishes to align its digital strategy to the

objective of the Green Deal9 and to foster the development of the Green Digital Economy

10. As

follow-up of this digital package, a Global Digital Cooperation Strategy is under preparation.

The EU is committed to the protection of rights in the digital era, in particular the protection of

the right to privacy, the right to freedom of opinion and expression, data protection, child rights

and to limit surveillance of communications in line with rights norms and standards. These

commitments are set out in the Council conclusions on the Action Plan on Human Rights and

Democracy 2015-201911

and the EU Human Rights Guidelines on Freedom of Expression

5 https://ec.europa.eu/international-partnerships/european-consensus-development_en

6 The Staff Working Document Digital4Development: mainstreaming digital technologies and services into EU

Development Policy (D4D) available at: https://ec.europa.eu/transparency/regdoc/rep/10102/2017/EN/SWD-2017-

157-F1-EN-MAIN-PART-1.PDF 7 Communication: Shaping Europe’s digital future: https://ec.europa.eu/info/sites/info/files/communication-shaping-

europes-digital-future-feb2020_en_4.pdf

Communication: A European strategy for data: https://ec.europa.eu/info/sites/info/files/communication-european-

strategy-data-19feb2020_en.pdf

White paper on Artificial Intelligence: https://ec.europa.eu/info/sites/info/files/commission-white-paper-artificial-

intelligence-feb2020_en.pdf 8 The vision is based on the EU values and standards which aim at granting an adequate level of citizen protection

from abuse, limitations to freedom of speech and access to online resources and networks, universal application of

privacy, data protection and data security by design principles. 9 https://ec.europa.eu/info/sites/info/files/european-green-deal-communication_en.pdf

10 https://ec.europa.eu/info/sites/info/files/european-green-deal-communication_en.pdf

11 Council Conclusions on the Action Plan on Human Rights and Democracy for the period 2015-2019:

https://www.consilium.europa.eu/media/30003/web_en__actionplanhumanrights.pdf

6

Online and Offline.12

The EU’s General Data Protection Regulation (GDPR) came into force in

May 2018, and establishes a comprehensive regime for data protection and privacy in the EU.

The EU seeks to lead by example in the global dialogue on data protection and privacy in the

digital age.

Moreover, the EU implements a rights-based approach to development, as called for by the

European Consensus on Development (2017), and integrates human rights commitments, norms

and standards into all development actions. The EU’s Gender Action Plan II (2016-20) commits

the EU to promote the full and equal enjoyment of all human rights and fundamental freedoms

and the achievement of gender equality and the empowerment of women and girls. This action

contributes to the plan’s priority to strengthen girls' and women's voice and participation.

The UN General Assembly adopted the resolution 68/167 in 2013, which expressed deep

concern about negative impacts that surveillance and interception of communications may have

on human rights13

and affirmed that the rights held by people offline must also be protected

online. In relation to the protection of child rights, the UN Committee on the Rights of the Child

is currently drafting a general comment on child rights in the digital environment14

.

1.3 Public Policy Analysis of the partner country/region

The immediate and medium-term developments in the digital transformation of the Kyrgyz

Republic have been included in the broader national campaigns and programmes underway. As

mentioned earlier, one of the signature intentions of the Kyrgyz Government has been the digital

transformation initiative described in the Concept “Digital Kyrgyzstan” and respective Roadmap

enabling to implement e-governance policy during 2019-2023, officially adopted in December

2018 and February 2019 respectively. This reflects the Kyrgyz Government's continued policy

commitment to tackle digital transformation in every sphere of social, economic, and political

life during a timeframe of 5 years. It provides guidance, for all interrelated sectors associated

with digitalisation.

The Kyrgyz President announced 2020 as the year of "Regional development, digitalisation and

child protection". Given this, the Kyrgyz Government intends to revolutionize the entire public

administration through the introduction of e-governance at all levels. With the support from

Estonia, the government has already developed a system of inter-agency electronic interaction

"Tunduk" that aims at connecting all state bodies and complete the transfer of state services to

electronic format. It is expected that digitalisation spending will be translated into inclusive

growth. The enhancement of data protection and cybersecurity has been made a priority in both

the digital strategy and in the recently approved cybersecurity strategy.

The Concept “Digital Kyrgyzstan” has identified 3 key priorities, which for the most part

provide a comprehensive coverage of the reform needs of the Sector: (i) Creating new

opportunities for the population through the development of digital skills; (ii) Provision of high-

quality digital services, increase of efficiency, effectiveness, openness, transparency,

accountability and fight against corruption of the public administration system, increasing the

level of citizen involvement in the processes of making state and municipal decisions through

digital transformation of the system of state and municipal government; (iii) Ensuring economic

growth through digital transformation of priority sectors of the economy, strengthening

international partnership and the creation of new economic clusters.

12EU Human Rights Guidelines on Freedom of Expression Online and Offline:

https://eeas.europa.eu/sites/eeas/files/eu_human_rights_guidelines_on_freedom_of_expression_online_and_offline_en.pdf 13 https://undocs.org/A/RES/68/167 14 https://www.ohchr.org/EN/HRBodies/CRC/Pages/GCChildrensRightsRelationDigitalEnvironment.aspx

7

These priorities are translated into six core interventions, which are supported by the respective

sub-measures: (i) Development of digital skills through the introduction of digital education and

the development of digital skills at all levels of the education system; development of IT

education, preparation of highly qualified IT professionals; digital skills training for the entire

population, including vulnerable groups; development of national digital content in local

languages; (ii) Improvement of the normative and legal base focused on creation an enabling

environment conducive to sustainable innovative development; strengthening trust and security;

(iii) Capacitating the state institutions to accelerate digital transformation through capacity

building of state institutions; (iv) Development of digital infrastructure and platform through

provision of digital infrastructure (broadband and other internet solutions);data protection,

cybersecurity and data processing centre; single digital platform; (v) Development of a digital

state through promotion of digital parliament; public and municipal e-services; digital justice;

transparency and accountability; (vi) Development of digital economy through digitalisation of

economy; stimulation of domestic digital innovations; stimulation of international technology

transfer; digitalisation of agriculture; digitalisation of light industry; digitalisation of tourism

sector; stimulation of creative economy.

The Digital Concept is relevant and credible, because it rests on the Government ability and

leadership to tackle the challenges of the digital transformation. Despite frequent government

turnover, there are no drastic policy shifts observed yet, the latter usually depending on the

political institutions underlying policy-making. The Concept makes clear that digital policy has

internal logic and rationale and appears to have the right magnitude to achieve its goals; the

policy is based on reliable data, adequate resources necessary to run the process and trusted

institutions; as well as the policy is consistent with a longer-term vision and strategic direction

such as NSDS 2040.

According to the UN Global e-Government Survey 201815

, which measures countries’ use of

ICTs to deliver public services, the scope and quality of online services, status of

telecommunication infrastructure and existing human capacity, the Kyrgyz Republic ranked 91st

out of 193 UN member states with e-Government Development Index -0.583. It demonstrates a

high level of e-government development when EGDI values above in the range of 0.5 and 1.

Two years ago (in 2016), the Kyrgyz Republic ranked 97 with EDGI 0.4969. It is a noticeable

improvement and the Kyrgyz Republic continues to struggle to improve its e-government

standing.

Recent noticeable business reforms in the Kyrgyz Republic put the country among 20 economies

improving the most on ease of doing business score (WB Doing Business)16

. The Kyrgyz

Republic improved in the areas of getting electricity, getting credit and paying taxes. It was

noted that the country made paying taxes easier not only by consolidating the tax on interest

income into the corporate income tax but also by introducing an online platform for filing and

paying taxes.

Large-scale activities to transfer public services into the digital format have been launched. A

number of digital public services has been increased; the e-public services portal has become

operational. The national campaign on biometric registration17

was quite positive: to date, over 3

million citizens (above 50% of population) have passed biometric registration process. These

data have been heavily in use during election process at all levels, including presidential

elections held in 2017, and will be in use in the upcoming Parliament elections scheduled for

15

E-Government Development Index (EGDI): https://publicadministration.un.org/egovkb/en-us/Data-Center 16

World Bank, Business reforms: https://www.doingbusiness.org/en/reforms/top-20-reformers-in-db2020 17

EU-funded electoral reform budget support programme has also contributed to the process.

8

October 2020. Elections based on biometric data have been acknowledged as fair and transparent

by international observers.

In 2018, prior to the endorsement of the Digital Concept, about EUR 9.7 million was budgeted

for the sector and only 42% was executed. Due to fiscal constraints, the items such as goods and

services as well as fixed assets were mainly underfinanced. After approval of the Digital Concept

the budget allocations for the sector have been increased significantly, which manifests the

Government’s serious intention and the policy credibility.

According to the Law on the 2019 State Budget, KGS 1.523 billion (EUR 19.8 million) was

allocated to the State Committee on ITC, including KGS 610 million (EUR 7.9 million) for the

programme “Development of the information and communication technologies”. In addition,

KGS 500 million (EUR 6.5 million) was allocated to the programme “Digital Economy”. The

digital transformation has been prioritised in the country policy and funding since 2019 as

catalyst for accelerating and promoting sustainable development and timely achievement of the

SDGs.

Ministries/Agencies

(Budget allocated under the

Digital Concept budget)

2018

(KGS)

2019

(KGS)

2020

(KGS)

2021

(KGS)

1. State Committee on

Information Technologies and

Communication (SCITC),

TOTAL

742 986 000 1 522 815 500 1 654 085 000 1 888 822 100

1.1 Programme budget

“Development of the

information and communication

technologies”

595 220 000 615 271 200 571 254 900 565 146 500

2. Ministry of Finance

(programmes):

Digital Economy

500 000 000 500 000 000 NA

1 EUR=76.9 KGS

The budgets for 2019 and 2020 for the Digitalisation actions indicate that the digital reforms

continue to be priority and well-financed in real terms. As the SCITC is serious about moving

towards a more results-based approach and the programme budget formulation, it is well-advised

to review how it drafts and costs its Action Plans in future.

The programme budget “Development of the information and communication technologies”,

which aims to promote electronic governance, implementation of electronic public services,

contains mainly development and investment components enabling successful progressive

development of the digital environment and the access to a modern digital ICT/IT infrastructure,

which is a basic requirement.

In the meantime, the policy costing is quite challenging for the Government due to overall

funding gaps in the national budget and to a capacity shortage in preparing the costing. It should

be noted that major communication infrastructure costs have not been budgeted yet. However,

the digitalisation road map costing has been advancing targeting April-May 2020 when the

Ministry of Finance circulates its requirement to submit the budget estimation by line-ministries,

necessary for 2021 budget formulation and mid-term budget forecast 2022-2023.

The Government intends to attract external funding and investments for broadband connection

nationwide: for instance, the World Bank programme “Digital CASA” has become effective

since February 2019 and the amount of about USD 50 million was budgeted for 2019 under the

9

Public Investment Programme, which has USD 3.5 million for policy improvement and media

support. Overall, the Digital Concept budget for 2021 is set to nearly double, thanks among other

things to the support provided by the European Union under this Action.

The Kyrgyz Government recognises that digital economy and digital education are increasingly

becoming the recipe and the vehicle for a sustainable economic growth. Countries that are able

to swiftly adjust to this evolving digital environment will reap the greatest digital dividends,

while the rest are likely to fall behind. Well-designed internet-based training helps workers

upgrade their skills. New media platforms can increase citizen participation. And digital

enablers—digital finance, digital identification, social media, and open data—spread benefits

throughout the economy and society, further strengthening the interaction between technology

and its complements. Better perceptions of government accountability would lower the cost of

borrowing for the sovereign and the private sector, further boosting investment and growth. In

addition, according to the WB study “Digital dividends” (2016), growth, jobs, and services are

the most important returns to digital investments. Digital technologies help businesses become

more productive; people find jobs and greater opportunities; and governments deliver better

public services to all. Government can promote incentives that foster innovation and competition

among service providers to help lower the cost of connecting to the internet, thereby expanding

access for disadvantaged people.

Indeed, the digital transformation through introduction of e-governance at all levels envisages

profound changes to the country communication and information system and the way in which

the Government will ensure its steering and monitoring function. Data collection and processing

will be enhanced and the quality of decision making improved.

1.4 Stakeholder analysis

In order to engage representatives of civil society and expert community in formulation and

implementation of the state policy on digital transformation, the Expert Council on Digital

Transformation has been established under the President of the Kyrgyz Republic. The Expert

Council is intended to serve as a think tank to help to implement the Digital Kyrgyzstan Concept

based on the best practices and evidence-based research. The Expert Council includes both

officials and independent experts, including representatives of civil society organisation active in

promotion of human rights such as “Internet policy civic initiative”18

.

Supervision of the implementation of the Digital Transformation Concept and associated

Roadmap is attributed to the First Vice-Prime-Minister Boronov. Every three months, the

government holds meetings where the progress of the implementation of the Roadmap is

reported. Quarterly, the government reports to the Security Council on the performance progress

of the Concept “Digital Kyrgyzstan”.

The State Committee for Information Technology and Communications (SCITC) of the Kyrgyz

Republic and the Ministry of Finance will be the main interlocutors while the programme

implementation.

The State Committee for Information Technology and Communications (SCITC) is an executive

body in charge of the implementation of the Digital Roadmap, which was established in April

2013. It ensures the implementation of the e-Government program, coordinates projects and

initiatives that are implemented by various government agencies and line ministries. The

18 https://internetpolicy.kg

10

Committee is also responsible for the telecommunication sector, ensuring the cybersecurity and

data protection of the national ICT infrastructure and managing ICT projects aiming to improve

the situation with digital inequality in rural and remote areas. There are about 90 people working

for the organisation, where 75 are the central office staff members.

There is also a formal, consultative mechanism such as a Public Advisory Council (PAC)19

consisting of 9 representatives of the civil society organisations, human rights activists and

private sector established and operational under the SCITC since 2018 according to the PAC

Law endorsed in 2014.

When it comes to the capacity of responsible officials, the leadership is advised by a small group

of national experts who bring a strong mix of talents, experience and expertise. The advantage of

being a relatively small country is that over the years a relatively stable circle of outstanding

professionals has been formed who often move between government roles, academia and

international donor-funded assignments. All of this means that at the highest level, there is no

shortage of competence or capacity. However, the downstream functional capacity, starting with

units and agencies within the line Ministries involved in the process - and going to regional and

local levels - remains uneven, and to some extent beholden to the legacies of the Soviet system.

To address the existing inertia in downstream capacity, and harness the creativity and initiatives

of entrepreneurial stakeholders at central and local levels, the Ministry of Education and Science

is tasked to take deliberate action that leads to sustainable impacts on both fronts. This is where

the role of education becomes critically important. By supporting robust engagement, the

Ministry with its international development partners is expected to address digital skills

development through short-term and long-term education solutions.

The beneficiaries of the Programme will be the Kyrgyz Government, PAC, central, regional and

local administrations or semi-public institutions, the private sector, potential service and

education providers, SMEs, students and workers mastering digital skills and benefiting from

better employability, as well as local population benefiting from the connectivity and availability

of various services.

1.5 Problem analysis/priority areas for support

Access to basic services is limited, in particular in rural areas. Even where services exist, they

are often under-resourced, leading to inadequate outcomes in health and education and limited

access to basic infrastructure. This issue seems to be the main socio–economic challenge for the

Kyrgyz Republic for the next decade. More than 20 years of significant underfinancing of public

services severely depleted human and physical capital.

It is expected that digitalisation spending will be translated into inclusive growth. It is well

known that digital technologies bring many benefits to consumers but also new risks, such as

possible exclusion and inequality as well as misuse of digital data. It is necessary to ensure that

the benefits of digital technologies are accessible for all and rights-based, excluding potential

digital divide.

During 2019-2020, the years designated by the Government of the Kyrgyz Republic as the Years

of Regional Development and Digitalisation, the Government will put a lot of efforts to create a

new mindset that can implement necessary developments in public administration and business.

Taking into account the present digital progress in the country, it is recommended that this

19 http://ict.gov.kg/index.php?r=site%2Fcouncil&pid=299&cid=30

11

programme will provide assistance in digital policy and regulatory frameworks as well as digital

capacity building with a special focus on the following priorities:

Priority 1: Development and introduction of e-learning materials and facilities to increase

the availability of digital competence and literacy with a special focus on groups living in

vulnerable situations. Despite some gains and major investments in e-government development

made by the country, the digital divide persists. This indicates that the digital divide could

deepen between people who are able and those who are not able to use the Internet and online

services, for instance women and groups of people living in vulnerable situations, such as people

with disabilities and ethnic minorities, jeopardising the vison of the 2030 Agenda for sustainable

development for leaving no one behind. Human capital and digital literacy are widely

acknowledged to be a pre-requisite for any sustainable digital transformation, and to support this

priority, the Action will serve as a tool to provide accredited, quality-assured digital learning

opportunities, targeted in particular at people from vulnerable groups. Learning resources will

also be made available through a web-based portal.

Priority 2: Development and introduction of e-services for achieving sustainable

development and empowering communities, especially youth, women, groups living in

vulnerable situations and rural communities. According to the global competitiveness

index20

, The Kyrgyz Republic in 2018 was ranked 97. Based on its analysis, the following key

factors have been blocking sustainable progress: slow innovation activities, low maturity of

technologies and infrastructure, limited local market and weak governance and institutions. It is

expected that digitalisation can be used by government to improve government effectiveness,

which becomes even more important in the context of the current pandemic, better connect to

their citizens through e-government tools, including electronic identification means, which might

help minimise inequality by providing access to basic services such as health and justice and

promote economic and social rights. The goal of this Action is to ensure that the Government of

the Kyrgyz Republic broadens the amount and variety of services available to its population

through online resources. Moreover, government openness and accountability, transparency and

inclusion through free access to information can successfully curb corruption and illicit flows of

money.

Priority 3: Development of data protection and strengthening trust and security.

The Law of the Kyrgyz Republic on Personal Data Protection has been effective since April

2008. In July 2017, the amendments to the Law on Personal Data were approved, which

improved the regulation of the exchange, transfer and storage of personal data in information

systems and significantly updated the legislation with respect to electronic commerce. However,

despite the existence of the legislation, it is still required to adopt an effective data protection and

privacy mechanism, develop rules of procedure and establish supervisory mechanism that will

oversight correspondence of personal data processing, storage and protection, privacy protection,

and a sanction system for violations and mismanagement, modelled on GDPR21

and in line with

international human rights standards. Strengthening of competence and capacity of the

authorized state bodies on the right to privacy, protection of personal data and public awareness

on digital security are key to ensure right pace of the reforms. Taking into account that more than

half of the country population is currently online, there is also an important need for increased

cyber protection and electronic identification means which take into account citizens’

convenience but also data protection standards. According to the Global Cybersecurity Index

201822

, the Kyrgyz Republic ranked 111 with a quite low score – 0.254. The score demonstrates

20

http://reports.weforum.org/global-competitiveness-report-2018/ 21

The EU General Data Protection Regulation will be taken as a model 22

https://www.itu.int/en/ITU-D/Cybersecurity/Documents/draft-18-00706_Global-Cybersecurity-Index-EV5_print_2.pdf

12

that the country only started to initiate commitments to cybersecurity. The recently approved

Cybersecurity strategy 2023 and its action plan (August 2019) is the first step to improve

cybersecurity position and ability to maintain resilient and reliable information infrastructure

with aim to ensure the safety of citizens and minimize damage and recovery times from cyber-

attacks.

1.6 Other areas of assessment

1.6.1 Fundamental values

The Kyrgyz Republic has ratified all core international human rights conventions, and in

particular relevance to this action, is the International Covenant on Civil and Political Rights

(ICCPR), the International Covenant on Economic Social and Cultural Rights (ICESCR) and in

relation to the protection of children online, the Convention on the Rights of the Child and the

Optional Protocol on the Rights of the Child on the sale of children, child prostitution and child

pornography.

Adherence to the values of human rights and fundamental freedoms figure high in the public

announcements of the government, however torture and ill-treatment continues to be widely used

across the Kyrgyz Republic and impunity is predominant. The societal intolerance towards the

minorities, especially sexual and lack of interest from the authorities to address these issues

prevails.

The Kyrgyz Republic close and strategic ties with Russia also has a strong influence on the

political and social discourse. Russia is overwhelmingly popular in the society not least because

of popularity of Russian language and media. In the past there was a tendency to copy-paste

some of Russian legislation, e.g. on foreign agents and anti-LGBT.

The Kyrgyz Republic has a democracy with a real civic space, but political volatility indicates

that consolidation is still needed. The country is considered the most democratic country in

Central Asia and has witnessed a number of political transitions since independence in 1991 with

the last parliamentary (2015) and presidential elections (2017) having taken place in a relatively

fair and transparent way. Electoral reforms are on-going and could open up for more competitive

elections with equal conditions for political parties for the next Parliamentary elections expected

in October 2020.

The Government shows commitment to fight inequalities and the country has progressive gender

legislation and policies. Despite the legal guarantees, women are not equally represented in the

civil service and the political field and polls are showing a negative opinion of women’s

participation in political and economic sphere in the young population. Furthermore, the country

is experiencing a backward trend – increase in bride kidnapping, decrease in women’s

employment rate from 62% to 42 % between 2000 and 2018.

The proposed programme intends to pay a special attention to the efforts and budget allocations

towards greater inclusiveness in the country. These measures will be guided by the EU Gender

Action Plan 2016-2020 to ensure gender equality firmly at the centre of the proposed Sustainable

Development Goals (SDGs) and encourage behavioural change regarding gender based violence.

13

1.6.2 Macroeconomic policy

According to the latest International Monetary Fund’s (IMF) Article IV approved in June 2019,

the economy has experienced moderate growth of 3.5 percent in 2018, benefiting from a benign

regional environment, particularly in Russia, the source of most remittances and non-gold export

receipts. Low inflation (around 1.5%), lower fiscal deficits, and a stable banking sector point to

the success of stabilization policies implemented by the government and National Bank of the

Kyrgyz Republic (NBKR, the central bank) under eight successive Fund-supported programs23

.

However, the economy remains vulnerable to external shocks because of the high level of

remittances (29 percent of GDP), the concentration of exports on gold (37 percent of exports of

goods), the level and composition of the public debt (56 percent of GDP, 4/5 of which is

denominated in foreign currency), and the level of the current account deficit (8.7 percent of

GDP). In addition, economic growth has been insufficient to significantly raise living standards

and continue to reduce poverty.

While stressing the need to ensure long-term debt sustainability, a modest expansionary fiscal

stance, as implied by the 2019 Budget, was considered appropriate. Given the negative output

gap and tighter than anticipated fiscal stance in 2018, an increase in the deficit could be helpful

without jeopardizing long-term sustainability. To create the appropriate fiscal buffer, the fiscal

deficit should, however, remain below 2.5 percent of GDP from 2020 and beyond, allowing the

stabilization of public debt. There is the need for heightened efforts to increase fiscal space for

development needs by improving domestic revenue mobilization and expenditure efficiency.

IMF called for reducing tax exemptions, the high public-sector wage bill, and energy sector

subsidies, and to strengthen public financial management. The IMF stressed the importance of

implementing risk-based supervision and strengthening the bank resolution framework as well as

soonest transferring the recently acquired problem bank to the state. Strengthening the fiscal

framework, improving financial sector oversight, further bolstering the AML/CFT framework,

and buttressing the rule of law should help improve governance and reduce vulnerabilities to

corruption.

Although recent business reforms in the Kyrgyz Republic put the country among 20 economies

improving the most on ease of doing business score, the investment climate is still not very

conducive to unlock the full potential of private sector development with corruption being one of

the most problematic perceived factor. Loans/credits to SMEs are provided at too high interest

rates which inhibit proper business development.

1.6.3 Public Financial Management (PFM)

The PFM Reform Strategy for 2017-2025 adopted in December 2016 sets a relevant and credible

policy reform framework for the PFM area. The Strategy stems from the 2015 PEFA

assessment24

that provided a detailed overview of the status of the PFM system and its

development since 2009. It aims at i) comprehensive and transparent budget, ii) an orderly and

predictable implementation of the budget and iii) control in the use of public funds and skilled

and professional government apparatus contributing to efficient public financial management.

The enhanced PFM system is expected to contribute to improvements in public service delivery.

The PFM Strategy has been divided into three subsequent stages that aim at: (i) improved

financial discipline; (ii) fiscal sustainability; and (iii) effective and efficient state services.

The first stage – Improved financial discipline – has been operationalised with the 2017- 2019

Action Plan. It addressed the following issues (i) for budget credibility related to fiscal forecasts,

23

Meanwhile, there is no ongoing IMF programme in Kyrgyzstan. The last one was completed in April 2018. 24

2018 PEFA assessment will likely commence in November 2019

14

accurate costing, commitment reporting, (ii) for budget comprehensiveness and transparency

related to budgetary classifications and more accessible and comprehensive budget information,

strengthened MTBF and programme budgeting and (iii) for budget oversight with payroll

control, internal audit, comprehensive and timely accounting and reporting.

The Ministry of Finance (MoF) has continued to introduce incremental improvements in the

local IS-KAZNA software: since January 2019 the fourth version of this sofware has been

initiated. Its main new feature is the automated budget preparation module that is now

effectivelly tested within the 2020 Budget preparation. The other features of the fourth version of

IS-KAZNA software include (i) automatic control of the budget estimates againts the approved

budget; (ii) different levels of access to reports, and (iii) automatic recovery of budget

commitement when processing a chargeback.

The “E-Kyzmat” system has been launched and is expanding, providing a unified database of

government and civil servants, and also the efficiency of data processing, relevance,

completeness and reliability in making managerial decisions, to which 56 central offices of state

bodies are already connected. In total, 256 organizations are connected to the system, including

territorial and subordinate units, the data of more than 11 000 employees is digitized. On the

basis of this system, the introduction of the state electronic document management system has

already begun.

In the public procurement area the authorities continue to expand the e-procurement: a new

design of the e-procurement portal with more user friendly facilities has been launched, direct

procurement through e-catalogue is operational and automatic reservation of commitments in the

budget estimates at the tender launching stage has been introduced.

The revenue mobilisation policy was formulated in the State Tax Service Development Strategy

adopted in June 2019. Specific elements of this Strategy stem from the last TADAT assessment

(2017) and include: (i) integrity of the registered taxpayer base; (ii) effective risk management;

(iii) timely filing of tax declarations; (iv) accurate reporting on tax declarations; (v) efficient

revenue management; (vi) accountability and transparency. The changes in the tax policy and tax

administration are also necessitated by the harmonisation processes with EAEU requirements25

.

Implementation of the State Tax Service Strategy, supported by Development Partners (IFC,

USAID, SECO, JICA), has brought steady improvements in the tax collection rates, e.g.:

between 2015 and 2018 the VAT revenue increased from 7.7% to 9.5% of GDP.

1.6.4 Transparency and oversight of the budget

The entry point is met, as the Government’s budget was published on the 25 December 2019 at

http://minfin.kg/ru/novosti/byudzhet/zakony. Transparency of the budget has been considerably

enhanced since the relatively poor score of 20 in the Open Budget Index (OBI) of 2012.

Government immediately sought to address all the issues raised by the Open Budget Survey

(OBS) at that time.

Since 2013, the preliminary budget statement, MTBF, draft budget, and Budget Law as well as

monthly, six-monthly, and annual reports on execution have all been published on the MoF

website. MTBF and Budget Circulars have been available also in printed format, as is the

Citizen’s Budget, developed with civil society involvement since 2011.

25 Eurasian Economic Union: Russia, Kazakhstan, Belarus, Armenia, Kyrgyzstan

15

The Annual Audit Report of the Chamber of Accounts is also published and available at the CoA

website. Public budget hearings (on draft budget and budget execution reports) contributed to

increased participation of the civil society. Also, parliamentary oversight of the budget appears

to be strengthening. This is reflected in the latest OBS results on 2017 data published in 2018,

with the overall OBI score increasing to 55 (OBI 54 in 2015), with 31 for public participation

and 74- for budget oversight. Limitations in scores result from a limited usefulness and

intelligibility of the information in the various published budget and budget execution

documents.

It is expected that digitalisation of business processes will significantly add value and

promote transparency, e-governance and fight against corruption enabling to target governance

effectiveness and inclusive growth in the country.

2. RISKS AND ASSUMPTIONS

Below is a summary of the main risks identified in the latest validated Risk Management

Framework for the Kyrgyz Republic 26

.

Risks Risk level

(H/M/L)

Mitigating measures

The risk of shrinking space for

civil society and reduced freedom

of media (in 2017, five lawsuits

were initiated against media)

increased from “moderate” to

“substantial” with a further

upward potential, if the current

trend continues.

M Mitigating measures will be taken through

comprehensive and coherent EU-KG dialogue

and programmes/projects.

The following key mitigating measures have

proved to be productive, namely: (i)

continued EU-KR policy dialogue, incl.

meetings at high level; (ii) strengthened role of

the Development Partners Cooperation

Council (EU is co-chairing) to coordinate and

deliver common messages to the authorities.

Torture and inhuman treatment is

still deemed to be wide-spread. H There are ongoing actions/projects that

promote moderate discourse on religion

among groups at risk of radicalisation,

including youth; torture prevention.

While the Foreign Agents act was

defeated in Parliament other

recent legislative initiatives, the

arrest of the main opposition

leader and opened criminal case

against the leading opposition

candidate after the presidential

elections (who came second with

34% of vote) brings risks against

the civil society, HR and the

independence of the judiciary.

M The following key mitigating measures proved

to be productive, namely: (i) continued EU-

KR policy dialogue, incl. meetings at high

level; (ii) strengthened role of the

Development Partners Cooperation Council

(EU is co-chairing) to coordinate and deliver

common messages to the authorities.

Implementation of non-

discrimination towards religious,

ethnic and sexual minorities is

still highly problematic.

H There are ongoing actions/projects that

promote moderate discourse on religion

among groups at risk of radicalisation,

including youth; torture prevention.

Political and economic instability

within the country and/or within

the region disrupts the

M The following key mitigating measures proved

to be productive, namely: (i) continued EU-

KR policy dialogue, incl. meetings at high

26

April 2019

16

implementation of the Country

Strategy as well as sector

strategies, incl. Digital

Transformation Strategy

level; (ii) continued joint actions/leverage with

the key budget support providers such as IMF,

WB, ADB, EU to deliver common messages

on macroeconomic situation and associated

slippages; (iii) strengthened role of the

Development Partners Cooperation Council

(EU is co-chairing) to coordinate and deliver

common messages to the authorities; (iv)

continued joint cooperation of WB, Swiss and

EU towards a sound PFM through the PFM

Trust Fund; (v) continued RoL programme to

address effectiveness of RoL, justice and fight

against corruption.

Reduced commitment to ensuring

that the digital strategy adheres to

human rights commitments and

standards, in particular the right to

privacy, data protection and

effective controls and limits on

digital surveillance.

M A rights-based digital strategy will be

promoted, that protects the right to privacy,

data protection and promotes effective

controls and limits on digital surveillance, in

line with international standards, in particular

the EU’s GDPR and international human

rights norms. Political and policy dialogue will

promote a rights-based approach to

digitalisation, civil society organisations that

work in the area of civil rights protection, will

be partnered and awareness raising initiatives

will be implemented.

Assumptions

The Government of the Kyrgyz Republic, the European Union, and Development Partners

continue to support the strategic goals of the Country Sustainable Development Strategy and

the Sustainable Development Goals 2030 as they relate to the digitalisation;

The macro-economic situation in the country stabilises and the forecasts contained in the

Medium Term Budget Framework for country digital transformation are realised;

The Government of the Kyrgyz Republic remains committed to the implementation of reforms

targeted at the introduction of the principles of good governance and the digital transformation

reform;

Civil Society Organisations are prepared to play a constructive role in the policy dialogue and

policy implementation.

Conclusion (including. risk of non-intervention):

The budget support operations in KR are essential to ensure that the sector policies targeted have the

appropriate means to reach the expected results in crucial sectors. Corruption is an issue, but the

issue would be the same with a project approach. Also KR is becoming extremely sensitive and

critical to external international high paid consultants. EU has more leverage to support sustainable

reforms through EU budget support which helps opening doors and facilitates political and policy

dialogues.

3. LESSONS LEARNT AND COMPLEMENTARITY

3.1 Lessons learnt

The proposed action is designed on the basis of the experience gained and lessons learned from

the implementation of the Budget Support Programmes in other sectors, which highlight the need

to:

Ensure that the reforms are located in a transparent policy framework reinforced by well-

developed and achievable strategies and action plans, and supported by allocations in the

annual and multi-annual budgets. This is particularly important for the digital

17

transformation, which is a cross-cutting issue affecting all crucial sectors, where strategic

issues such as sector governance, institution building and sector finance management

have been largely ignored by the donors;

Ensure synergy between the digital reforms and measures to strengthen public finance

management;

Establish structures and mechanisms in order to ensure effective coordination of the reform

process;

Ensure synergies between budget support and complementary support;

Ensure that a sound balance is achieved between fixed and variable tranches, such that the

size of the variable tranche is sufficiently large to incentivise support to the digital

transformation from the Ministry of Finance and other line ministries.

3.2 Complementarity, synergy and donor coordination

The EU is among the very few Development Partners who can actively be engaged in

addressing strategic questions related to the management and financing of the sector through the

budget support and respective policy dialogue. Using this opportunity, the EU Delegation has

been involved in the regular meetings of the ICT Sector Donor Working Group designed to

provide oversight of Development Partners’ activities and provide recommendations to the

relevant authorities on sector policy and finance development.

Equally important, the proposed programme will be built on achievements generated by the

ongoing EU-funded programmes such as Rule of Law and Education. The Rule of Law has

being promoting development of software tool to support the legislative E-drafting procedure,

setting up online platform for public discussion of draft legal acts, establishment of electronic

Court Information and Case Management System in three pilot courts, which will be replicated

countrywide. The ongoing education budget support is envisaged to promote the development

and operationalisation of the Education Management Information System to increase

transparency and accountability of the education sector management.

With the proposed programme the EU Delegation seeks complementarity between budget

support action and possible blending operations. Blending operations facilitating priority

investments within the focal sector are on the one hand expected to benefit from the policy

dialogue linked to budget support, notably where it also contributes to an improvement of the

investment climate. On the other hand, they can provide additional leverage to this dialogue.

This innovative design through a mix of EU Toolbox (Budget support, Twinning and other

complementary measures) will significantly contribute to strengthening the holistic multi-

sectoral approach supported by the EU and the Kyrgyz Government.

In addition, the proposed actions would complement the ongoing World Bank project such as

“Digital CASA” (USD 50 million) and UNDP’s “E-fiscalisation” (USD 25 million) that cover

digital connectivity and infrastructure, and enabling environment for digital economy through

adopting legal, regulatory and institutional foundations for digital economy.

The programme shall ensure the highest standards in terms of cybersecurity; it could therefore

rely on technical assistance by the EU CyberNet – the centre of cyber expertise co-funded by the

European Commission and managed by the Estonian Information System Authority, which is

about to start its activities in 2020. The EU CyberNet fosters cooperation, mainly through

capacity building, between EU Member States and partner countries to enhance their capacities

in protecting against malicious cyber activities on critical infrastructures, cybercrime and in

aligning cyber standards to the EU levels.

18

4. DESCRIPTION OF THE ACTION

4.1 Overall objective, specific objective(s), expected outputs and indicative activities

The overall objective of the proposed EU assistance is to reduce the unemployment and

inequality and strengthen the good governance in the country.

The specific objectives and expected outputs are as follows:

Specific objectives Expected induced outputs Expected direct outputs

1. Improved employability

of workforce with digital

skills in line with the

rights-based approach

Development of government’s

training programmes in digital

skills focused on women and

groups in vulnerable situations.

Policy dialogue promotes

improved coordination between

public institutions involved in

digitalisation, education and

employment policies.

2. Improved transparent

and inclusive access to

public and private

services

Improved connectivity

infrastructure, especially in rural

areas.

Increased availability of basic

public e-services with a focus on

rural areas.

Strengthened e-governance

systems and solutions enabling to

operate irrespective of COVID19

lockdown.

Enhanced integration of

ICTs/digital technologies in

public service delivery.

Coordination between digital

sector planning and budgeting

improved.

Strengthened capacity of relevant

government bodies to manage

and participate in e-governance.

Policy dialogue promotes

digitalization of public services

towards reducing inequality and

strengthening resilience to past

and future crises.

3. Increased citizens

privacy and data

protection, as well as

protection from

cybersecurity

Increased national and local

operational capacities to prevent,

respond to and address cyber-

attacks and other accidental

failures.

Interpretability, security and data

protection standards are

enhanced.

Enhanced public campaigns on

public awareness of the right to

privacy and data protection,

including in the context of

Improved international

cooperation on data protection

and cybersecurity issues,

involving public and private

sector as well as civil society, at

both policy and operational

levels taking into account the

lessons learnt of the COVID-19

pandemic.

19

increased data processing due to

COVID-19 outbreak.

The programme aims to contribute to reducing unemployment and inequality by supporting

digital development, which cannot be adequately funded by the Government. The proposed

budget support and procurement of services will allow mitigating financial risks, and thus,

funding of actions that without them would not be possible, or only possible at later stage, lower

quality, etc.

Budget support will address the specific objectives 1, 2 and 3 through the Policy dialogue and

leverage to support necessary reforms, ensure government’s full engagement, ownership and

commitment, sufficient budgets, and budgetary planning coherent with the policy. It will also

contribute to necessary changes in institutional and socioeconomic environment, including

organizational flexibility, connectivity, attitudes in society, government spending, ease of

business, long-term regulatory outlook. Proposed activities include:

1. Continued policy dialogue with the Government, emphasising the specific objectives, results,

disbursement conditions of the Sector Reform Performance Contract as well as the adequate

implementation of the complementary measures;

2. Regular monitoring and policy dialogue on achievements of the digital policy and digital

education objectives, on macro-economic and Public Finance Management (PFM)

developments and budget transparency;

3. Preparation of the disbursement files and monitoring of performance targets and indicators to

be used for disbursement;

4. Participation in the high-level digitalisation-related events, sector meetings, reviews and

technical working groups.

Complementary Support

The budget operation will be accompanied by the complementary support to strengthen the

capacity of the relevant institutions in overall management and development of the sector and

will target all three specific objectives of the Programme. More precisely:

Twinning modality of a grant nature will contribute to institution building based on partnership

cooperation between the ITC Committee and EU Member States (EU MSs) institutions possibly

through the accepted mandated bodies enabling national authorities to address SOs 2 and 3.

Proposed activities, among others, include:

Advisory services to enhance co-operation, co-ordination and information sharing between

different authorities involved in digitalisation process development and management;

Consultations on development and implementation of digitalisation policy and regulation;

Support to improve e-governance services, digital skills and monitoring of digitalisation

process and to strengthen resilience to past and future crises;

Best practice sharing and training of the ITC Committee and other relevant bodies to plan,

deliver, manage and report on digitalisation interventions.

Support in building the institutional arrangements and regulatory frameworks on data

protection, with possible approximation to the GDPR model, and cyber security issues.

Procurement will be embedded in the ITC Committee, the Ministry of Finance and the Ministry

of Education and will work in close synergy with selected EU MS(s) to support specific areas

where direct management would bring added value to address all specific objectives of the

programme. Proposed activities, among others, include:

Support to PFM progress and budget transparency;

20

Support in digital sector planning and budgeting;

Development of policy papers and policy advice on intersectoral digital issues, amongst

others, in order to promote delivery of better services and digital skills for the population

based on rights-based approach and gender equality, including lessons learnt of the

COVID-19 pandemic.

Organization of media events, production of media packages on key deliverables/results of

the actions, among others, implementing the EU communication & visibility plan.

4.2 Intervention Logic

The Sector Reform Performance Contract is designed to reinforce the strategic, institutional and

financial management framework of the Digitalisation Sector. It is also expected to create a

context within which there are more focused interventions of Development

Partners/International Financial Institutions to directly address infrastructure and training needs,

achieving greater impact than in the past. To achieve this, the proposed action will focus on

the following key dimensions: further development of the policy dialogue with the key partners

and stakeholders; strengthening the Government’s capacity to adopt and implement a more

results-based management approach as well as to mitigate impact of past and future crises, and a

more cost-effective approach to policy formulation and implementation; enhancing equitable

access to e-services and e-education; improvement of the service delivery of the public sector;

and the development of greater e-governance to ensure transparency and accountability.

The outcomes are expected to be increased access to and quality of e-services and e-education

provision leading to improved sector productivity; more cost-effective e-governance, which is

better secured, managed and resilient to ongoing and future crises as well as more tailored to

the needs of the digital economy and attractive to private service providers, businesses and

investors, more vibrant and better-educated labor force.

The longer-term impact will be to reduce unemployment and inequalities, focusing on

women and people living in vulnerable situations (young people, ethnic minorities, and those

living with disabilities), who are usually the most at-risk group under crisis situations.

Overall, it is anticipated to observe a progress towards digital society in which the usage of ICTs

is common across demographic and location parameters of the population.

4.3 Mainstreaming

Digital technologies can empower women economically and socially. Because social norms and

time and mobility constraints are often more severe for women than for men, women could

benefit greatly from technology. Digital technologies can reduce gender gaps in labor force

participation by making work and education arrangements more flexible, connecting women to

work and education, and generating new opportunities in online work, education, and the sharing

economy. The same advantages can be applied for people with disabilities.

The potential internet service providers will be encouraged to work with partners to create more

locally developed and locally relevant content, especially content for children who speak

minority languages, live in remote locations and belong to marginalized groups. It is also

expected that they boost efficiency as existing activities and services become cheaper, quicker,

or more convenient. And they increase inclusion as people get access to services and education

that previously were out of reach.

There are major human rights implications around the digital agenda, in particular related to the

right to privacy, data protection and surveillance and interception of communications. The rights

21

held by people offline must also be protected online. Procedures, practices and legislation related

to communications surveillance, interception and collection of personal data should adhere to

international and national human rights laws and standards.

4.4 Contribution to Sustainable Development Goals (SDGs)

The benefits of digital technology for the sustainable development goals are relatively well-

integrated into the 2030 Agenda, through mainly Goal 4 (inclusive and quality education), Goal

9 (industry, innovation, and infrastructure), Goal 10 (reducing inequality) and Goal 16 (peace,

justice and strong institutions). By now, there is a well-established understanding that digital

technology can help drive progress for all goals, and it is essential to accelerate this potential to

be able to reach the goals by 2030. There are many different ways in which digital technology

can benefit the SDGs. For example, technology might help minimise inequality by providing

access to basic services, such as e-justice, e-health or online education. It can be used by the

government to better connect to their citizens through e-government tools, and to improve

stakeholder engagement and information management. Broadband can be a key enabler to boost

connectivity and prevent ‘digital isolation’.

5. IMPLEMENTATION

5.1 Financing agreement

In order to implement this action, it is foreseen to conclude a financing agreement with the

partner country.

5.2 Indicative implementation period

The indicative operational implementation period of this action, during which the activities

described in section 4 will be carried out and the corresponding contracts and agreements

implemented, is 72 months from the date of entry into force of the financing agreement.

Extensions of the implementation period may be agreed by the Commission’s responsible

authorising officer by amending this Decision and the relevant contracts and agreements.

5.3 Implementation of the budget support component

5.3.1 Rationale for the amounts allocated to budget support

The amount allocated for the budget support component is EUR 18 000 000, and for

complementary support is EUR 3 760 000. This amount is based on past experience and lessons

learnt. The level of support should allow providing sufficient fiscal space to advance

reform implementation and consolidated achievements. The EU budget support will play a

key role in the sector’s modernisation and investments as well as in increasing the

effectiveness of Government’s expenditure. The present action will offer fiscal space for the

implementation of the Digitalisation strategy.

The total amount allocated to the fixed (EUR 9 000 000) and variable (EUR 9 000 0000)

tranches is structured to intensify digital outcomes in the Kyrgyz Republic . Thus, the percentage

allocations are 50% for the fixed tranche and 50% for the variable tranche to promote substantial

incentive to address result-oriented and performance indicators attached to the variable tranches.

5.3.2 Criteria for disbursement of budget support

a) The general conditions for disbursement of all tranches are as follows:

- Satisfactory progress in the implementation of the Digital Kyrgyzstan Concept/Strategy

2019-2023 and continued credibility and relevance thereof;

22

- Maintenance of a credible and relevant stability-oriented macroeconomic policy or

progress made towards restoring key balances;

- Satisfactory progress in the implementation of reforms to improve public financial

management, including domestic revenue mobilisation, and continued relevance and

credibility of the reform programme;

- Satisfactory progress with regard to the public availability of accessible, timely,

comprehensive and sound budgetary information.

b) The performance indicators for disbursement that may be used for variable tranches are

indicatively the following:

- Improvement of digital skills of workforce with a special focus on gender and vulnerable

groups of people.

- Digitalisation of public services to promote open e-services towards reducing inequality.

- Promotion of e-governance to strengthen online trust and security as well as improve

government performance, transparency and accountability.

The chosen performance indicators and targets to be used for disbursements will apply for the

duration of the Action. However, in duly justified circumstances, the Ministry of Finance

may submit a request to the Commission for the targets and indicators to be changed.

Note that any change to the targets should be agreed ex-ante at the latest by the end of the first

quarter of the assessed year. The agreed changes to the targets and indicators shall be agreed in

advance and may be authorised in writing (either through a formal amendment to the financing

agreement or an exchange of letters between the two signing parties of this financing agreement).

In case of a significant deterioration of fundamental values, budget support disbursements

may be suspended, reduced or cancelled, in accordance with the relevant provisions of the

financing agreement.

5.3.3 Budget support details

Budget support is provided as direct untargeted budget support to the national treasury. The

crediting of the euro transfers disbursed into Kyrgyz Som, which will be undertaken at the

appropriate exchange rates in line with the relevant provisions of the financing agreement.

Indicative breakdowns Total 2020 2021 2022 2023

Fixed tranche EUR (Million) 9 6 3 0 0

Variable tranche EUR (Million) 9 0 3 3 3

Total 18 6 6 3 3

5.4 Implementation modalities for complementary support to budget support

The Commission will ensure that the EU appropriate rules and procedures for providing

financing to third parties are respected, including review procedures, where appropriate, and

compliance of the action with EU restrictive measures27

.

5.4.1 Grants: (direct management):

(a) Purpose of the grant(s)

27

www.sanctionsmap.eu Please note that the sanctions map is an IT tool for identifying the sanctions regimes. The

source of the sanctions stems from legal acts published in the Official Journal (OJ). In case of discrepancy between

the published legal acts and the updates on the website it is the OJ version that prevails.

23

The proposed twinning modality of a grant nature will contribute to institution building based on

partnership cooperation between the targeted public administration and accepted mandated

bodies of Member States with the purpose of achieving mainly specific objectives 1 and 2. These

objectives are linked to the policy dialogue, planned and agreed reform process in the beneficiary

country and capacity building of beneficiary administration enabling to put in place an effective

mechanism to promote country digital reform programme.

Secondment of a full-time Member State expert (Resident Twinning Adviser – RTA) and short-

term expertise to a Beneficiary administration will enable to share best practice and know-how,

to strengthen capacity and guide for key decisions supporting the Kyrgyz Government to

implement its policy. A call for proposals may be launched in the second half of 2020 under a

suspensive clause, in order to proceed to a speedy implementation of the twinning component of

this action.

(b) Type of applicants targeted

This action to be implemented in direct management with an (or a consortium of) EU Member

State Agency(-ies) in accordance with Article 62(1)(a) of Regulation (Eu, Euratom) 2018/1046

(the Financial Regulation). The Contracting Authority will circulate the Twinning Fiche, which

constitutes the launch of the Call for Proposal, simultaneously to all Member States National

Contact Points (Member State NCP) by e-mail (with a copy to the Twinning Coordination Team,

specifying the deadline for the submission of proposals and the indicative date of the selection

meeting). Member States shall prepare proposals based purely on the comparative advantage of

their administrative system and the quality, experience and availability of public expertise

required for the implementation of the project. Member State NCP shall submit proposals to the

Contracting Authority and to the Twinning Coordination Team.

5.4.2 Procurement (direct management)

The drive to digitalise processes is fueled by a strong assumption of achieving higher overall

organizational performance and building competitive advantages, equally important for both

survival and growth, which are addressed by the proposed budget support and complementary

measures described below.

Subject Indicative type

(works, supplies,

services)

Indicative trimester of

launch of the procedure

Procurement of services: Technical

Assistance, incl. review missions

Services/ Q3 2021

Procurement is expected to contribute to the achievement of all three Specific objectives put

forward by the SRPC.

5.5 Scope of geographical eligibility for procurement and grants

The geographical eligibility in terms of place of establishment for participating in procurement

and grant award procedures and in terms of origin of supplies purchased as established in the

basic act and set out in the relevant contractual documents shall apply, subject to the following

provisions.

The Commission’s authorising officer responsible may extend the geographical eligibility on the

basis of urgency or of unavailability of products and services in the markets of the countries

24

concerned, or in other duly substantiated cases where the eligibility rules would make the

realisation of this action impossible or exceedingly difficult.

5.6 Indicative budget

EU

contribution

(amount in

EUR)

Indicative

third party

contribu-

tion, in

currency

identified

Budget support- cf section 5.3 18 000 000 N.A.

Objectives 2 “Improved access to public and private

services” and 3 “Increased privacy and data protection as

well as cybersecurity” composed of

2 000 000 N.A.

Grants (direct management) – cf section 5.4.1: Twinning

grant

2 000 000 N.A.

Objectives 1 “Improved employability of workforce with

digital skills irrespective of gender”, 2 “Improved access to

public and private services” and 3 “Increased privacy and

data protection as well as cybersecurity” composed of

1 260 000

Procurement (direct management) – total envelope under

section 5.4.2

1 260 000 N.A.

Evaluation, (cf. section 5.9), – Audit (cf. section

5.10)/Expenditure verification

250 000 N.A.

Communication and visibility (cf. section 5.11) 250 000 N.A.

Totals 21 760 000

5.7 Organisational set-up and responsibilities

The EU Delegation to the Kyrgyz Republic constitutes the Contracting Authority for the

Digitalisation SRPC. The State Committee for Information Technology and Communications

(SCITC) and the Ministry of Finance of the Kyrgyz Republic are the principal counterparts.

A Steering Committee, chaired by the State Committee for Information Technology and

Communications (SCITC) of the Kyrgyz Republic and co-chaired by the EU Delegation, will

be responsible for oversight of the Digitalisation Sector Reform Performance Contract (SRPC).

The Steering Committee will include as a minimum: SCITC, EU Delegation, the Ministry of

Finance and other relevant line ministries, civil society organisations.

A Project Steering Committee will be convened for the Technical Assistance Project. The exact

composition of the Committee will be agreed with the beneficiaries, contractor and the

Contracting Authority during the Inception Phase of the project. The Chair of the Committee

will be taken by the SCITC and co-chaired by the EU Delegation.

25

5.8 Performance and Results monitoring and reporting

The State Committee for Information Technology and Communications (SCITC) of the Kyrgyz

Republic and the Ministry of Finance as the main implementing partners under the Budget

Support component will be responsible for performance monitoring and reporting during the

Steering Committees and independent review missions. The disbursement request along with a

self-assessment report for year N shall be submitted by the Ministry of Finance indicatively by

end of Q2 of year N+1 every year.

The day-to-day technical and financial monitoring of the implementation of this action will be a

continuous process, and part of the implementing partner’s responsibilities. To this aim, the

implementing partner shall establish a permanent internal, technical and financial monitoring

system for the action and elaborate regular progress reports (not less than annual) and final

reports. Every report shall provide an accurate account of implementation of the action,

difficulties encountered, changes introduced, as well as the degree of achievement of its results

(outputs and direct outcomes) as measured by corresponding indicators, using as reference the

Logframe matrix (for project modality) or the partner’s strategy, policy or reform action plan list

(for budget support). Relevant SDGs indicators shall also be taken into account during the

reporting exercise.

All monitoring and reporting shall assess how the action is taking into account the rights-based

approach working principles as well as how it contributes to gender equality and women’s

empowerment.

The Commission may undertake additional project monitoring visits both through its own staff

and through independent consultants recruited directly by the Commission for independent

monitoring reviews (or recruited by the responsible agent contracted by the Commission for

implementing such reviews).

5.9 Evaluation

Having regard to the importance of the action, a final evaluation will be carried out for this

action or its components via independent consultants contracted by the Commission.

It will be carried out for accountability and learning purposes at various levels (including for

policy revision), taking into account in particular the fact that that this programme introduces

some innovative elements as well as combination of Budget support and Twinning modality.

The evaluation of this action may be performed individually or through a joint strategic

evaluation of budget support operations carried out with the partner country, other budget

support providers and relevant stakeholders.

The Commission shall inform the implementing partner at least 30 days in advance of the dates

foreseen for the evaluation missions. The implementing partner shall collaborate efficiently and

effectively with the evaluation experts, and inter alia provide them with all necessary

information and documentation, as well as access to the project premises and activities.

The evaluation reports shall be shared with the partner country and other key stakeholders. The

implementing partner and the Commission shall analyse the conclusions and recommendations

of the evaluations and, where appropriate, in agreement with the partner country, jointly decide

on the follow-up actions to be taken and any adjustments necessary, including, if indicated, the

reorientation of the project.

26

Evaluations shall assess to what extent the rights-based approach working principles as well as

gender equality and women’s empowerment have been applied. In this regard, expertise on

human rights and gender equality will be ensured in the evaluation teams.

Evaluation services may be contracted under a framework contract.

5.10 Audit

Without prejudice to the obligations applicable to contracts concluded for the implementation of

this action, the Commission may, on the basis of a risk assessment, contract independent audits

or expenditure verification assignments for one or several contracts or agreements.

It is foreseen that audit services may be contracted under a framework contract.

5.11 Communication and visibility

Communication and visibility of the EU is a legal obligation for all external actions funded by

the EU.

This action shall contain communication and visibility measures which shall be based on a

specific Communication and Visibility Plan of the Action, to be elaborated at the start of

implementation.

For the purpose of enhancing the visibility of the EU and its contribution to this action, the

Commission may sign or enter into joint declarations or statements, as part of its prerogative of

budget implementation and to safeguard the financial interests of the Union.

In terms of legal obligations on communication and visibility, the measures shall be

implemented by the Commission, the partner country, contractors, grant beneficiaries and/or

entrusted entities. Appropriate contractual obligations shall be included in, respectively, the

financing agreement, procurement and grant contracts, and delegation agreements.

The Communication and Visibility Requirements for European Union External Action (or any

succeeding document) shall be used to establish the Communication and Visibility Plan of the

Action and the appropriate contractual obligations.

It is foreseen that a contract for communication and visibility may be contracted under a

framework contract.

27

APPENDIX – INTERVENTION LOGIC TABLE (FOR BUDGET SUPPORT)

Results chain Indicators

(max. 15)

Baselines

2020

Targets by the end of the

budget support contract

2023

Sources of data

Expected

impact of the

policy

(Overall

objective)

Reduction of unemployment and inequality

through affordable digital connectivity and

digital education.

Status of SDGs 4, 5, 9, 10 and16

Unemployment rate (sex and

age-disaggregated)

Human Development Index

(HDI)

Status of SDGs 4, 5,

9, 10 and16 in 2020

Official unemployment

rate is 6.2% in 2018

HDI 2019: 0.674

Progress in

achievement of

indicators attributed to

SDGs 4, 5, 6, 10 and

16

%-decrease of unemployment

(sex- and age-disaggregated)

Increase of HDI

National Statistics Data, Survey;

Social Inclusion Survey; Internal

and External Assessment of the

implementation of the Digital

Kyrgyzstan Concept 2019-2023

and its Roadmap;

various Management Information

Systems;

UN SDGs regular report;

Human Development Report (UN)

Expected

outcomes of

the policy

(Specific

objective(s))

1. Improved employability of workforce with

digital skills in line with the rights-based

approach.

Improved digital skills among the

workforce

High Technology Park

(HTP) was established by

the Government Decree in

May 2012 to promote the

ICT development sector

with a special focus on ICT

business advisory and

support to ICT start-ups.

The Innovation Centre of

Digital Competences (ICDC)

is set up under the HTP.

Women represent at least 20%

of students completing ICDC

Data Analytics courses

receiving a certificate

Approved regulation creating the

Innovation Centre of Digital

Competences (ICDC) by HTP

Board.

ICDC report with data on number

of women receiving certificates.

2. Improved access to public and private

services (transparency and inclusiveness)

Integration of local administrations to

E-Aimak system

Automated Information

System “Sanarip aimak”-E-

Aimak (digitalised local

authorities) is being

developed to connect

remote areas with the

central information system

“Tunduk” on data

exchange interactions and

transactions. Currently

there are 453 local

authorities/administrations

registered across the

country, which are subject

to integration to the E-

Aimak system.

Integration of 100% of local

authorities/administrations to

“E-Aimak” system through

availability of e-services on

birth, marriage and residence

registration.

Official report of the central

information system “Tunduk” on

integration and e-services

provided by E-Aimak system.

28

3. Increased privacy and data protection as well

as cybersecurity

3.1. Increased protection of personal

data by the government

Draft Decree for

establishing a Personal

Data Protection Agency

(Data Ombudsman) has

been submitted to the

Government for approval

Personal Data Protection

Agency is established.

Online public awareness

platform on data protection,

data privacy and citizen’s

rights on data protection is

functioning on PDPA’s

website, incl. activated online

‘helpdesk’ service, especially

in the context of increased

data processing due to

COVID-19 outbreak.

The Personal Data Protection

Agency is set-up by the

Government Decision.

Screenshot from online public

awareness platform and online

‘helpdesk’ service report

3.2. Improved cybersecurity

National Strategy on

cybersecurity along with its

Action Plan 2019-2023

was approved by the

Government Decree in

August 2019 as one of the

measures indicated in the

“Digital Kyrgyzstan” Road

Map.

Kyrgyzstan’s position in

Global Cybersecurity

Survey 2018 is 111 with a

score of 0.254 www.itu.int.

Computer Emergency

Response Team (CERT)

was set up under the State

Committee on National

Security (SCNS) in 2019 in

close cooperation with the

State Committee on ITCs

Improved score in Global

Cybersecurity Index (GCI)

Global Cybersecurity Index report

(latest available)

29

Induced

outputs

1.1Enhanced skills and competences needed in

the digital era taking in line with the rights-

based approach

2.1 Strengthened e-governance systems and

solutions.

.

2.2 Enhanced integration of ICTs/digital

technologies in public service delivery.

2.3 Coordination between digital sector

planning and budgeting improved.

3.1 Increased national and local operational

capacities to prevent, respond to and address

cyber-attacks and other accidental failures.

3.2 Interpretability, security and data protection

standards are enhanced.

1.1 New ICT-learning opportunities are

set up.

2.1 Improved Kyrgyzstan’s position in UN Global e-Government Survey

2.2. Urban/rural data exchange,

interactions and transactions are

operational.

2.3 Digital policy costing has been

improved.

3.1 Improved Kyrgyzstan’s position in

Global Cybersecurity Survey

3.2 The Personal Data Protection

Agency (PDPA) has been set up and

fully operational

1.1. HTP has been

established. Establishment

of the Innovation Centre of

Digital Competences

(ICDC) to promote digital

skills training under HTP is

in the pipeline.

2.1 Kyrgyzstan’s position

in UN Global e-

Government Survey 2018:

91.

2.2 Tunduk system is

integrated with all state

bodies and will be

extended to local

administrations across the

country through “E-

Aimak” system.

2.3 Digital policy costing

has been advancing but not

yet finalised

3.1 Kyrgyzstan’s position

in Global Cybersecurity

Survey 2018: 111

3.2 Draft Decree for

establishing PDPA has

been submitted to the

Government for approval

1.1 The Innovation Centre of

Digital Competences (ICDC)

is set up under the HTP.

Number of digital starts-up

created with participation of

women and vulnerable groups

2.1 Level of improvement of

Kyrgyzstan’s position in UN

Global e-Government Survey.

2.2 Tunduk system is

integrated with local

administrations across the

country through “E-Aimak”

system. E-services are

available in the country

regions.

2.3. Digital policy costing is

reflected in the annual budget

and MTBF

3.1 Level of improvement of

Kyrgyzstan’s position in

Global Cybersecurity Survey.

3.2 At least 95% of the actions

are implemented in

accordance with the Action

Plan of PDPA preferably

developed to ensure the

development of rules of

procedure, the establishment

of a supervisory mechanism to

oversight personal data

collection, processing, storage

and protection, and of a

sanction system for violations

and mismanagement,

modelled on GDPR

1.1 Annual Performance Reports

of HTP and ICDC.

1.2 Registered digital starts-up

2.1 UN Global e-Government

Survey: https://publicadministration.un.org

2.2 Regular statistics reports

generated by the E-systems.

2.3 Annual budget and MTBF

available in the MoF’s official

website.

3.1 Global Cybersecurity Survey: www.itu.int/en/ITU-D/Cybersecurity

3.2 Progress Report of the Action

Plan implementation.

30

Direct

outputs

1.1 Increased digital skills and digital business

transformation with participation of women

and vulnerable groups

2.1 Policy dialogue is productive to promote

digitalization towards reducing inequality.

2.2 Basic e-services are publicly available

enabling people to learn and apply for

necessary services on-line

2.3 Capacity of relevant government bodies to

manage and participate in e-governance is

strengthened.

3.1 Increased digital security awareness of

citizens.

3.2 Improved international cooperation on data

protection and cybersecurity issues, involving

public and private sector as well as civil

society, at both policy and operational levels

1.1 Number of digital courses created

with participation of women and

vulnerable groups.

2.1, 2.2 and 2.3:

Inter-service Tunduk system has been

integrated with E-Aimak system

enabling urban/rural data exchange and

transactions. Urban and rural

population have access to e-services.

3.1 Number of media events and

campaigns, media packages on key

deliverables/results of the security

actions with support of the EU

Twinning and other TA projects

3.2 EU Twinning programme with

involvement of EU MSs has been

operational and the working plan has

been implemented.

1.1 Establishment of the

Innovation Centre of

Digital Competences

(ICDC) under HTP is

promoted by the EU

programme enabling to

activate practical IT skills

training

2.1, 2.2 and 2.3:

E-Aimak systems is being

developed. Interconnection

is in the pipeline.

3.1 EU Twinning

programme and other TA

projects are in the pipeline

3.2 EU Twinning

programme is being

prepared.

1.1 Level of performance of

BS indicator 1.1

2.1, 2.2 and 2.3:

Number of connected entities

and transactions. Share of e-

services provided to rural

population.

3.1 Level of progress of the

EU TA projects and % of

visibility targets achieved.

3.2 Level of progress of the

EU Twinning programme and

% of targets of the working

plan achieved.

1.1 BS performance and

disbursement reports

2.1, 2.2 and 2.3:

Statistics reports generated by the

systems.

3.1 EU TA progress reports

3.2 EU Twinning progress reports