This week, quarantine measures in the country began to be softened and it was not by chance that this week a meeting of representatives of the country's business associations with the President of the Kyrgyz Republic took place. Important points were discussed on the quickest recovery of economic activity and government assistance to business. In addition, this week the government announced the development of a third package of anti-crisis measures. The data on the decrease in economic growth and the data on the volume of GDP during the quarantine period, the budget deficit and measures by the Government were announced. A letter was sent to the Russian Federation on the issue of gas prices, intentions to launch industrial enterprises, fresh data on received financial resources from donors, and on the delay of customs payments. In general, it can be noted that the week was more active in the business part of the country's society.
The third package of measures. The Russian-Kyrgyz Development Fund (RKDF) has announced that it has developed a third package of anti-crisis measures.
It means:
1. A preferential loan product for the development of agriculture was developed.
As part of the preparation and initialization of cluster development in various sectors of the Kyrgyz economy, the RKDF has developed new loan products based on the cluster approach in the following areas:
- development of dairy production;
- development of the meat industry;
- development of aquaculture.
2. The threshold for direct financing in the regions has been reduced to USD 100 thousand
In order to support entrepreneurs in remote regions of the country, as well as to increase accessibility to RKDF funds in Talas, Batken and Naryn regions, the minimum lending threshold was reduced from USD 200 thousand to 100 thousand.
3. A concessional financing was approved for businesses whose activities are aimed at combating COVID -19
A special loan product has been developed for preferential financing of enterprises whose activities are aimed at combating the spread of COVID-19. Under this loan product, organizations that focus on the production of personal protective equipment, hygiene products, medical devices, or medical equipment can receive financing.
Meeting of president with business. This week, a meeting of business representatives of Kyrgyzstan with the country’s President took place. They talked about the problems that entrepreneurs face in quarantine. Concrete proposals were voiced to restore economic activity in the country.
The President of the Kyrgyz Republic recommended the Government to actively involve the business community in the process of developing short-term and long-term anti-crisis programs.
Digitalization in business. “The digitalization policy that has been continuously pursued over the past two years has helped mitigate the negative effects of the current crisis,” said this week Altynbek Ismailov, director of the High-Tech Park, at a meeting of the President of the Kyrgyz Republic with leading representatives of the country's business associations.
He especially noted that at the moment there is no question of whether digitalization is needed or not - everyone was convinced that there cannot be future without it.
Ismailov emphasized that many enterprises continued their full-fledged activities during the quarantine period. Programmers, wherever they are, can work remotely using digital technology, he added.
Opinion of the business ombudsman. Business Ombudsman of Kyrgyzstan Robin-Ord-Smith this week expressed concern and doubt about the appropriateness of additional bureaucracy and requirements related to the need for business entities to obtain permits to enter and move around Bishkek.
“While entrepreneurs and businesses should focus on resuming their activities, maintaining financial stability and jobs, they spend time in hours-long queues, collecting papers and permits. And this will not lead to the much-needed fast recovery of the country's economy,” the report said.
Recession in the economy. A significant economic slowdown was recorded in Kyrgyzstan in April. Gross domestic product (GDP) in January-April 2020 amounted to about KGS 149 billion, and compared to January-April 2019, it decreased by 3.8%.
According to the National Statistical Committee of the Kyrgyz Republic, excluding enterprises developing the Kumtor deposit, the volume of GDP in January-April 2020 amounted to about KGS 129 billion and decreased by 4.6%.
The volume of industrial production in January-April 2020 amounted to about KGS 99 billion and compared with January-April last year decreased by 2.8% due to a decrease in the production of refined petroleum products (by 63.1%) and other non-metallic mineral products ( by 36.7%), production of leather and products from it, shoes (by 27.6%), and also drinks (by 11.9%).
Foreign trade. The foreign trade turnover of Kyrgyzstan in the 1st quarter of 2020 amounted to USD 1 billion 364.4 million.
According to data of the National Statistical Committee of the Kyrgyz Republic, compared with January-March 2019, the turnover decreased by 15.8%, while export deliveries decreased by 0.8%, import receipts - by 21.8%.
The volume of mutual trade with the EAEU countries in January-March 2020 amounted to USD 614 million and compared with January-March 2019 increased by 3%.
At the same time, export deliveries decreased by 3.7%, while import receipts, on the contrary, increased by 5.1%. The largest share of the republic’s mutual trade among the EAEU member states was with Russia - 71.7% and Kazakhstan - 26.5%.
Budget deficit. This week, the Minister of Finance of the Kyrgyz Republic submitted to the parliament a draft law “On Amending the Law “On the Republican Budget of the Kyrgyz Republic for 2020 and the forecast for 2021-2022”.
The bill was developed in order to ensure budget adjustments and effective management of the budget process in a state of emergency and quarantine in the republic caused by a coronavirus pandemic, the Ministry of Finance of the Kyrgyz Republic said.
The main factor for amending the budget parameters for 2020 was the change in the main indicators of the country's socio-economic development for 2020 due to the slowdown in economic growth as a result of the quarantine measures, the change in the budget revenues and the adoption of new socially significant spending initiatives aimed at the fight against coronavirus.
Request to lower the price. The State Committee for Industry, Energy and Subsoil Use of the Kyrgyz Republic asked Minister of Energy of Russia Alexander Novak to lower the selling price of natural gas.
Emil Osmonbetov, the chairman of the State Committee for Industry, Energy and Subsoil Use said that Kyrgyz citizens may refuse to use gas in the future due to the expected increase in tariffs.
“Given that a further increase in the US dollar exchange rate and, consequently, an increase in the tariff for natural gas, can lead to the abandonment of gas consumption by the majority of consumers and the switch to an alternative type of fuel, on April 23, the State Committee for Consolidation of Natural Resources sent a letter to the Ministry of Foreign Affairs of the Kyrgyz Republic addressed to Minister of Energy of the Russian Federation Alexander Novak, in which the State Committee asks to consider the possibility of reducing the selling price of natural gas lower from USD 150,” he said.
Factories will be launched. At the same time, Osmonbetov said that since the state of emergency was introduced, there were difficulties in obtaining raw materials, in particular from China, and because of curfews, difficulties arose in ensuring workers' access to workplaces.
“Some enterprises were forced to stop their activities, in particular, the Bishkek Machine-Building Plant, TNK Dastan, and the Frunze Metal Rolling Plant. A number of enterprises did not stop their work, but reduced the volume of production,” he stressed.
In general, the largest 10 enterprises have suspended their activities, including the Kant Cement Plant, Tokmok Glass Plant and others. In view of the decrease in sales volumes, the volume of production was also reduced.
“As a result of the measures taken, the bulk of the factories are working or will begin work in the near future. Despite the difficult financial situation, workers in many enterprises and companies saved 2/3 of their wages,” he said.
Fuels and lubricants from Russia. Russia delivered 156 thousand tons of gasoline to Kyrgyzstan.
Emil Osmonbetov said that at the end of last year, indicative balances on oil and oil products were signed between Kyrgyzstan and Russia. The volume for oil was set at 50 thousand tons, for gasoline - 460 thousand tons, diesel fuel - 485 thousand tons, fuel for jet engines - 100 thousand tons.
“In January-March of this year, 156 thousand tons of gasoline, 171 thousand tons of diesel fuel, 20 thousand tons of jet engine fuel was delivered. If necessary, together with the Russian side, adjustments will be made to the indicative balances until August,” the chairman of the State Committee for Industry, Energy and Subsoil Use emphasized.
Social payments. All protected articles of the state budget will be fully implemented.
Vice Prime Minister of the Kyrgyz Republic Erkin Asrandiev said that the tate budget expenditures have been reduced by KGS 10 billion. Reductions includes various kinds of acquisitions, travel expenses.
“Capital investments have substantially decreased. Protected articles, such as salaries, pensions, benefits and deductions to the Social Fund, remain in the original volume. Until today, payment for protected items is timely. The government intends to fulfill these obligations in full,” he said.
At the same time - against the backdrop of the pandemic as of May 1, 2020, according to the National Statistics Committee, GDP amounted to KGS 140 billion, which indicates a decrease of 3.8% compared to last year.
Asrandiev noted that according to the baseline scenario, the volume of GDP is planned to be reduced by 5.3% from last year's project.
“The forecast for the decrease in revenue is minus for more than KGS 30 billion KGS. This is affected by a decrease in trade, the closure of borders with China. The fact is that 70% of the goods comes from China. This affects not only customs revenues, but also domestic production. Therefore, there are such forecasts,” he said.
Where do the funds go? Officially announced that as for this week Kyrgyzstan received from donors external assistance in the total amount of USD 243 million.
According to Erkin Asrandiev’s data, actually Kyrgyzstan received USD 243 million. USD 120 million of them is the first tranche from the International Monetary Fund, which arrived at the end of March. These resources were directed to protected articles. In a word, these resources were directed to budget expenditures, which are prescribed by law.
“The second tranche in the amount of about USD 120 million was received on May 13. They have not been used yet. In addition, a total of USD 1.8 million was received from various sources for the fight against infection through the Ministry of Health and humanitarian assistance. These are various medical devices, humanitarian aid in the form of food, test systems, etc.” said the vice prime minister.
Kabar News Agency
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