Background

In 2004 the Kyrgyz authorities applied to the FIRST Initiative with a request to assist in the development of the Deposit Insurance Legislation based on the internationally accepted recommendations on efficient deposit insurance schemes. With FIRST assistance, draft legislation was prepared. Finally, the Law was adopted by Parliament in 2008. In accordance with the new Law, the Deposit Protection Agency was established and started its activity in August 2008.

Following the adoption of the legal framework and establishment of the Deposit Protection Agency, IMF and World Bank agreed that technical assistance would be provided by the IMF to the Central Bank in relation with its role in the functioning of the deposit insurance scheme, while the World Bank with the assistance of FIRST would focus on strengthening the institutional capacity of the newly established agency and the related regulatory framework.

Project

Goal:  Ultimately the project aims to:

(i) increase confidence in the banking sector, especially by depositors;

(ii) increase reliance on cash,

(iii) increase in banking sector deposits,

(iv) reduce deposit volatility and related banking sector vulnerability. 

Purpose: 

The main objective of the proposed technical assistance will be to support the capacity building of the Deposit Protection Agency (the DPA) in the Kyrgyz Republic.

Outputs:

The project technical assistance activities are in the following areas:

(i) consider and suggest measures to improve legislations related to the DPA's functions, including the laws on deposit protection, on bank and banking activity, on banking secret, on bankruptcy, etc.,

(ii) assist in preparing the basic secondary legislation and related internal manuals and instructions,

(iii) establish interrelations with other participants involved in the deposit protection system (Government, NBKR, banks, the bank resolution agency DEBRA, etc),

(iv) elaborate suggestion regarding the DPA's accounting, reporting, and information systems, and

(v) train the staff of the DPA on all key aspects of the DPA work. 

Project LIFE TIME is 13 months, starting in April 2010

Project BUDGET is $252,000

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