The Kyrgyz Republic is a small (191,300 sq. km), landlocked, mountainous, lowincome Central Asian country. Its population (5.2 million) is predominantly rural (CIA 2006). In 2004, per capita GDP was US$431 (Recent Economic Development, Jan–Dec 2004, WB). The Kyrgyz Republic devotes 5.6 percent of GDP to health care, about average for its income level. Some 41 percent of health spending is public, but out-of-pocket payments (formal and informal) account for 50 percent of health expenditures, a higher proportion than in comparable countries. In terms of health outcomes, it does slightly better, with a life expectancy of 68. In 1991, at the time of the breakup of the former Soviet Union (FSU), the Kyrgyz Republic had a norm-driven, centrally planned, general revenue–?nanced health system in which free health care was every citizen’s right. Between 1991 and 1996, the Kyrgyz economy collapsed, and GDP contracted by more than half with equivalently large reductions in government funding for the health system. As a result, the Kyrgyz Republic found itself saddled with an inef?cient and unaffordable health system and gradual erosion of health bene?ts coverage. Coverage erosion manifested itself in increased out-of-pocket payments both formal and informal. Reforms starting in the mid-1990s diversi?ed health sector ?nancing, centralized the ?ow of public funds into a national pool, clari?ed entitlements to health bene?ts, introduced provider payment reforms, strengthened primary care, rationalized the delivery of hospital services, updated treatment protocols, and broadened consumer choice. The Kyrgyz reforms were successful at halting the process of coverage erosion and at reversing the earlier trends in some areas by 2004. At the heart of the reforms was the recognition that ef?ciency gains had to be made before coverage and equity issues 269could be directly addressed due to tight resources and excess physical capacity. Although changing the provider payment mechanisms and restructuring service delivery are usually recognized as instruments for improving ef?ciency, they became critical preconditions for improving equity in the Kyrgyz context. Recognition of the interlinked nature of ef?ciency and equity meant that the reform instruments were realistic, appropriately sequenced and relied on internal resources in the system rather than on injection of additional government or donor funds. Several factors explain why coverage reform featured strongly in the Kyrgyz health system agenda: availability of data and information on the erosion of coverage and use of this information through advocacy; linking health reforms to the wider poverty reduction agenda, stressing to the connections between erosion of coverage and poverty; support of the president in the early phases of the reforms; support of the international community; and the equity orientation of the health reform architects and their recognition of the reality of the limited ?scal space.