The Role of International Financial Institutions in the Production and Marketing of Cotton in Central Asia The Cotton Sector in Central Asia: Economic Policy and Development Challenges 3-4 November 2005, London

Why Do IFIs Invest in Cotton? Economic Development: prominence within the economy Environmental Amelioration and Social and Human Development: widespread environmental and social maladies associated with irrigated cotton cultivation Poverty Reduction: potential for more significant improvement in rural incomes accrued from efficient, sustainable cotton production than from the cultivation other field crops

Caveats Heuristic paper intended to encourage discussion at a conference. Conclusions concern only IFI projects concerning cotton in Central Asia; not a comprehensive analysis of IFI strategy and projects

Policy Objectives Stabilize Privatize, liberalize, and marketize Decentralize Ameliorate Alleviate

Investments Remove subsidies, distortions, and excessive transfers Reform land rights Restructure production cooperatives into private farms Eliminate production quotas/goszakaz Introduce alternative input supply Introduce integrated pest management Liberalize input and farmgate prices Establish farmgate linkage with world markets Improve classing of cotton Privatize and refurbish cotton ginneries

Investments (cont.) Reform and create banks and credit Encourage collateralization Improve water management practices Rehabilitate water management infrastructure Facilitate Irrigation Management Transfer (WUAs) Reform agricultural institutions Make research and extension responsive to user needs

Integration into National Development Strategies Poverty Reduction Strategy Paper process involving IMF and WB: expression of will of Government and IFIs; prominent concerns with cotton and outline of projects as part of strategy National development strategies: more limited scope of reform; state discretion greater; more attention to hardware and less to software

Design Loan: portfolio, size, conditionalities, cost recovery Components: hardware and software Implementation arrangements Post-project sustainability and replication

Execution Management from headquarters: ADB centralized; WB more autonomous Task Team Leader Project Implementation Unit: experience; relationship with Government; post-project roles of staff International consultants: world experience; area knowledge and interaction with local staff and Government External factors: local and central governments, world market, macroeconomic factors Harmonization

Outcomes Most still ongoing Agriculture projects have long-term outcomes: in-project M&E or Implementation Completion Report results not a good measure of success/failure Mixed results: examples of Cotton Sub- Sector Project, RESP, Ak Altin

Recommendations Integration into National Development Strategies Design Execution Measurement of Results