Business activity in Kyrgyzstan has been on the rise this week, although figures have not changed much as the pandemic is in full swing and cash flow between countries is declining. Nevertheless, the gold reserve of Kyrgyzstan has grown, the rules for obtaining loans in favor of recipients have changed, and bank rates have not changed. At the same time, for the first time during the pandemic, inflation indicators were encouraging, but the flow of funds into the country decreased.
In general, the week in the chain of events during the global pandemic was quite good.
UN Framework Programs. Kyrgyzstan provided this week information on the measures taken by the government to reduce the negative impact of the spread of coronavirus infection on the socio-economic situation in the country, during a videoconference meeting to discuss key areas of the UN Framework Program.
Minister of Economy of the country Sanzhar Mukanbetov, speaking to representatives of the UN system and government agencies, stressed that the purpose of the Framework Program is to prepare the basis for urgent UN support in Kyrgyzstan in overcoming the medium and long-term socio-economic consequences of the crisis, identify the necessary resources, as well as to support further efforts to raise funds to combat COVID-19 in the country.
The program sets out five key areas of socio-economic response, for which the UN system will provide support at the global and country level. These areas include:
1. Healthcare: Ensuring accessibility of essential health services and protecting health systems;
2. Social protection: Helping people to cope with adverse situations by providing social protection and providing basic services;
3. Economic Recovery: Protecting jobs, supporting small and medium enterprises and informal workers through economic response and recovery programs;
4. Macroeconomics: creating conditions for the necessary increase in fiscal and financial incentives to make macroeconomic policies work for the most vulnerable layers of people, and strengthening multilateral and regional responses;
5. Social cohesion: Promoting social cohesion and investing in community-led resilience and response systems
Bank rates and inflation. The Board of the National Bank of Kyrgyzstan this week decided to keep the discount rate at 5%.
Chairman of the National Bank of the Kyrgyz Republic Tolkunbek Abdygulov said that the development of the country's economy is still largely influenced by external economic conditions and factors that have formed against the background of measures to counter the spread of coronavirus infection.
“Despite the gradual recovery of economic activity in the world, the situation in the external sector remains uncertain. It is expected that the return of economies to pre-crisis levels will take longer than previously predicted,” Abdygulov said.
He noted that the spread of the pandemic and its negative consequences were reflected in a sharp decline in economic activity in the Kyrgyz Republic in almost all sectors of the economy, except for the agricultural sector and enterprises of Kumtor.
“The indicators of the real sector of the country's economy continue to be in the negative zone, having reached their lowest values over the past few years. The inflow of remittances to the country remains below last year's figures, leading to more restrained domestic consumption,” he added.
Abdygulov also said that the dynamics of inflation continues the downward trend against the background of strengthening disinflationary factors.
“In August, the annual inflation rate dropped to 4.9% after reaching its peak in April of this year. The downward trajectory of inflation is facilitated by weak domestic demand, along with the saturation of the market with seasonal goods and the relative stabilization of the national currency,” he added.
In general, stability in the monetary environment of Kyrgyzstan remains. The short-term segment of the money market demonstrated an increase in rates against the background of an increase in the activity of market participants, while their fluctuations occurred near the key rate within the interest rate band established by the National Bank.
“The banking system maintains a high level of excess liquidity, which is formed mainly due to expense transactions through the budget channel. The National Bank continues to carry out sterilization operations, mainly in the short segment of the money market,” he said.
Maximum gold. This week the gold and foreign exchange reserves of the National Bank of Kyrgyzstan have reached a historic high of USD 3 billion 82 million.
Chairman of the National Bank of the Kyrgyz Republic Tolkunbek Abdygulov specified that by the instruction of president of the country, the National Bank has been actively buying gold for the national currency in the domestic market over the past two years.
“The measures taken by the National Bank of the Kyrgyz Republic allowed to increase the size of gold and foreign exchange reserves up to USD 3 billion 82 million, which allows covering the country's imports for 6.5 months. This is the historical maximum level of the country's gold and foreign exchange reserves since the opening of the National Bank of the Kyrgyz Republic,” he said.
Decrease in cash flow. The National Bank of Kyrgyzstan predicted a decrease in cash flow to the country.
Chairman of the National Bank of the Kyrgyz Republic Tolkunbek Abdygulov noted that the amount of transfers is expected to decrease compared to last year.
He recalled that in January-June 2020, the net inflow of remittances decreased by 13.1% compared to the same period in 2019 and amounted to USD 763 million.
Price for fuel. Oil traders have reduced the cost of the fuel basket by 17% on average since January this year.
According to the press service of Kyrgyzstan’s Oil Traders Union, monitoring of the imported volumes and prices of fuel and lubricants is carried out constantly.
On the basis of the processed data it is noted that during the period from January to Aug. 25 of the current year, oil traders have reduced the cost of fuel basket (the aggregate of all oil products) by 17% on average.
The basket of petroleum products in Kyrgyzstan consists mainly of gasoline Ai-95, Ai-92 and diesel fuel. Since the beginning of this year, prices for gasoline have decreased by 16% on average, and for diesel fuel by 21%. At present, oil traders in Kyrgyzstan keep prices in the retail network at a minimum level, the report said.
Since the beginning of 2020, gasoline in Kyrgyzstan has fallen by 15%, diesel fuel - by 20%, in Russia the price of gasoline has risen by 3% over the same period, and diesel fuel has risen by 8%.
Restructured loans. Over 50% of the loan portfolio of banks and microfinance companies in Kyrgyzstan has been restructured.
Chairman of the National Bank of the Kyrgyz Republic Tolkunbek Abdygulov said that the total amount of restructured loans amounted to KGS 80 billion, which is almost 200 thousand loans.
The head of the National Bank recalled that the restructuring of loans is carried out as part of government measures in the context of the COVID-19 pandemic.
“The National Bank gives explanations to both commercial banks and microfinance institutions to prevent the imposition of fines, as well as the need to restructure loans at the request of citizens,” he said.
Tolkunbek Abdygulov said that citizens can apply to commercial banks or the National Bank of the Kyrgyz Republic for all restructuring issues.
“The National Bank has created a department for consumer rights protection. The department has been working for a couple of years. Not a single appeal of citizens or business will be left without consideration,” he added.
New in lending. As of Aug. 25 of this year, the number of public sector employees who applied for a preferential mortgage exceeded 5 thousand people.
According to data of the State Hypothecary Company of the Kyrgyz Republic, the total amount requested by them is more than KGS 8 billion. At the same time, KGS 500 million are allocated in the republican budget for the purpose of state mortgage financing in 2020.
Currently, there is not enough financial resources to satisfy all current applications at one time. In this regard, and also in connection with the introduction of the electronic portal, on the basis of the Decree of the Government of the Kyrgyz Republic No. 213 of April 22, 2020, applications for a mortgage loan will be considered in order of priority, taking into account the date of application and approval of the list, with priority consideration of repeated applications.
Meanwhile, out of the total number of applications, about 700 citizens submitted applications two or more times, since the previously submitted application forms were legally valid for up to one year. After the expiration of the term, citizens had to re-collect documents and re-apply for a loan. Now this rule has been canceled by Government Decree No. 213 of April 22, 2020. Previously, if resources were available, loans were received by those who were the first to prepare all the necessary documents, accumulate a down payment, find housing for purchase and apply to banks.
Kabar News Agency
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