📋 Tender Overview
Project Name
Risk Layered Disaster Relief Finance Sector Development Program
Project Number
59154-001
Country / Economy
Regional
Kyrgyz Republic
Tajikistan
Project Status
Proposed
Project Type / Modality of Assistance
Grant
Source of Funding / Amount
Grant: Risk Layered Disaster Relief Finance Sector Development Program
Asian Development Fund US$ 50.00 million
Sector / Subsector
Finance / Finance sector development
Gender
Effective gender mainstreaming
Description
The proposed Risk-Layered Disaster Relief Finance Sector Development Program supports the Kyrgyz Republic and Tajikistan to improve institutional capacity for effective disaster risk financing (DRF), establish DRF instruments within a risk-layered approach, and reduce fiscal strain in the aftermath of disasters, including geophysical hazards, extreme weather hazard events, and health emergencies. The sector development program (SDP) combines: (i) contingent disaster financing (CDF) a financing option under the Asian Development Bank (ADB) policy-based lending modality using primarily grant financing to drive policy reforms, removing underlying barriers, and enabling ex ante quick-disbursing liquidity facilities for disasters of higher frequency but lower severity; and (ii) an investment grant to develop and pilot a disaster relief bond (DRB), also known as a catastrophe bond, an insurance-linked security instrument placed by ADB in international capital markets, to provide quick liquidity following lower frequency but higher severity earthquake and flood events.
Project Rationale and Linkage to Country/Regional Strategy
The Kyrgyz Republic's macroeconomic outlook remains positive, with an estimated 9% economic growth in 2024, sustained by government-led infrastructure initiatives and strong private consumption. Inflation declined sharply to 5.0% in 2024, aligning with the central bank's target, as a result of moderating commodity prices and a stable exchange rate. Growth is expected to ease slightly but remain solid at 8.5% in 2025 and 8.6% in 2026, supported by remittances and public investment. A rising budget surplus has helped reduce public debt to 37.6% of gross domestic product (GDP).
Tajikistan's economy also remains on a strong growth path, with GDP expanding by 8.4% in 2024, following solid growth of 8.3% in 2023 and 8.0% in 2022. This sustained performance is supported by continued investment activity and substantial financial inflows, primarily remittances, which accounted for 45% of GDP in 2024. Inflation was contained at 3.6%, the lowest rate since independence, driven by easing global food prices. On the fiscal front, the government maintained a prudent stance, although the budget deficit widened modestly by 0.4% of GDP in 2024. Total revenues increased because of improved tax compliance and revenue collection, however higher spending on public sector wages and investment led to a modest deficit. Public debt decreased from 30.2% of GDP in 2023 to
