Economic week of Kyrgyzstan Sept. 9 – 14, 2019

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The week in Kyrgyzstan was marked by a decrease in the political degree, which led to the prevalence of economic news in the life of the country. During this week, Kyrgyzstan announced that internal migration has declined, and the country's GDP has grown, while investment in the country has also unexpectedly increased. Meanwhile, a loan agreement was signed with Arabs to improve water supply in the regions. One of the important events was the creation of a new department in the country's Ministry of Foreign Affairs, the work of which will be connected with the economy. In general, the week in Kyrgyzstan was active.

EBRD’s contribution. It became known that the EBRD has invested over EUR 744 million in the economy of the Kyrgyz Republic, with the majority of investments supporting private entrepreneurship. This data was announced by the bank prior the visit of the EBRD delegation to Kyrgyzstan.

The Bank is actively working with the authorities on the mitigation of climate change related risks, including the provision of an uninterrupted water supply to households. The EBRD is paying special attention to the rehabilitation of public infrastructure and further increasing support to SMEs in the country.

The EBRD is the largest institutional investor in Central Asia, with close to €13.4 billion (US$ 14.7 billion equivalent) committed to 807 projects in a variety of sectors, from infrastructure to agriculture, with a focus on private-sector development.

Investment growth. It was unexpectedly announced that the inflow of foreign direct investment in Kyrgyzstan for the 1st half of 2019 compared to the same period in 2018 increased by 59.4% and amounted to USD 393.7 million.

According to data of the National Statistics Committee of the Kyrgyz Republic, the inflow of investments exceeded the level of outflow by USD 120.7 million.

In the structure of foreign direct investment compared with the first half of last year, there was an increase in the volume of loans received from non-residents, as well as reinvested earnings.

The bulk of foreign direct investment (about 98%) is directed to geological exploration, manufacturing enterprises, mining, information and communications, wholesale and retail trade, as well as financial intermediation and insurance.

At the same time, the volume of investments in exploration increased by 3.6 times, in manufacturing enterprises - by 2.7 times, wholesale and retail trade - by 26.9 percent, information and communications - by 0.5 percent, in while investments in mining enterprises decreased 1.8 times, the sphere of financial intermediation and insurance - 1.4 times.

The national debt is being paid off. The Ministry of Finance of the Kyrgyz Republic this week released information on the funds paid to pay off the state debt this year. In January-August 2019, KGS 16 billion 204 million were allocated from the republican budget to pay the public debt (external + internal).

According to data of the Ministry, as of July 30, 2019, the public debt (external + internal) of Kyrgyzstan amounted to USD 4 billion 453.99 million. Of them:

- USD 3 billion 767.49 million is the state external debt;

- USD 686.50 million is the state domestic debt.

The loan from the EBRD has been approved. This week, the Committee on Agrarian Policy, Water, Ecology and Regional Development of the Jogorku Kenesh approved a draft loan agreement between the Kyrgyz Republic and the EBRD.

The financial resources for the implementation of the project “Rehabilitation of the water supply and sewage system in the city of Jalal-Abad (phase 2)” are provided by the EBRD and the Special Fund for Shareholders of this bank.

The total project amount is EUR 9.275 million, of which:

- EBRD funds – EUR 4.0 million (credit);

- funds of the EBRD Special Fund for Shareholders – EUR 4.125 million (grant);

- EBRD additional funds – EUR 1.15 million (grant funds for technical cooperation).

Business opportunity in China. This week, it became known that Kyrgyz businessmen had the opportunity to showcase their products in China.

The Investments Promotion and Protection Agency of the Kyrgyz Republic, together with the Kyrgyz Ayu Holding, carried out the work to promote and advertise domestic goods in a neighboring country.

According to the Agency, an exhibition hall for Kyrgyz products will be opened at the Kashgar Free Economic Zone in the XUAR. It may feature goods from Kyrgyzstan for potential buyers from China. For interested companies, it is necessary to provide samples, as well as product catalogs for demonstration in the exhibition hall at no cost.

New Department of the Ministry of Foreign Affairs. This week, Kyrgyz Foreign Minister Chingiz Aidarbekov announced that a new department has been created in the Foreign Ministry system - the Department of Economic Diplomacy.

“The Department will be engaged in issues of assistance in attracting investments, promoting domestic products in foreign markets, in promoting tourism potential, etc,” he said.

Aidarbekov noted that the department is just starting to work.

GDP has grown. Kyrgyzstan's GDP in January-August 2019 amounted to more than KGS 334 billion, according to data of the National Statistics Committee of the Kyrgyz Republic.

Compared with the same period last year, GDP grew by 6.2%. Excluding enterprises developing the Kumtor field, the volume of GDP in January-August 2019 amounted to more than KGS 298 billion and increased by 3.0%.

The volume of industrial production amounted to more than KGS 169 billion and compared with the same period last year increased by 17% due to an increase in the production of basic metals (by 42.7%), in textile production (by 36.1%), and mining of metal ores ( by 27.6%), crude oil and natural gas (by 15.6%), chemical products (by 11.2%), and also due to coal mining by 6.2%.

Meanwhile, Kyrgyzstan’s foreign trade turnover for the same period amounted to USD 3.8 billion. Compared with the same period last year, there was a decrease of 6.9%, while export supplies increased by 9.1%, while import revenues, by contrast, decreased by 11.8%.

The volume of mutual trade between the republic and the EAEU member states in January-July 2019 amounted to $ 1.4 billion. And compared with the same period in 2018, it decreased by 9.5%. At the same time, a decrease in both export deliveries by 20.1% and import receipts by 6.1% was noted. The largest share of the republic’s mutual trade with the EAEU member states was in Russia, its share was 59.9% and Kazakhstan - 37.9%.

Arab loan. It is announced that Saudi Arabia will provide a loan of USD 30 million to Kyrgyzstan to improve rural water supply in Batken and Talas Oblasts.

A loan agreement was signed in Bishkek between Kyrgyzstan and the Saudi Fund for Development to improve rural water supply and sanitation in Batken and Talas Oblasts in the amount of USD 30 million.

Donor organizations are the Islamic Development Bank (IDB) and the Saudi Fund for Development (SFD). The amount of IDB financing is USD 20 million, the loan term is 30 years, of which 10 years are preferential.

The amount of financing of the SFR is USD 30 million, the loan term is 25 years, of which 5 years are preferential.

Co-financing from the government of the Kyrgyz Republic is provided in the amount of USD 10 million. The total project cost is estimated at USD 60 million.

Outflow of funds. This week it was announced again that the outflow of foreign direct investment in the first half of 2019 compared to the first half of 2018 increased by 15.5% and amounted to USD 273.0 million.

According to data of the National Statistics Committee, in the structure of foreign direct investment compared with the corresponding period in 2018, there was an increase in the outflow of trade loans, as well as reinvested profits.

An increase in the outflow of investments in the first half of 2019 was observed from agricultural enterprises - 10.0 times, construction industry - 4.7 times, mining - 2.3 times, exploration - 1.7 times, financial intermediation and insurance - 1.6 times, information and communications - 1.5 times. Along with this, the outflow of investments from enterprises in the field of hotels and restaurants decreased by 46.3 times, provision (supply) of electricity, gas and steam - by 2.3 times, transport activities - by 1.8 times, manufacturing - by 1.5 times, wholesale and retail trade - by 13.5 percent.

Soft loans. About 10 thousand soft loans were issued to producers of Kyrgyzstan.

According to data of the Ministry of Finance of the Kyrgyz Republic, under the project “Financing of Agriculture - 7”, 9 thousand 823 soft loans were issued to producers of the republic. At the same time, the total amount of loans amounted to 4 billion 854.5 million soms.

No harassment. This week, it was announced that in Kyrgyzstan there is no harassment of investor rights.

Deputy Minister of Economy of the Kyrgyz Republic Eldar Alisherov said that individual incidents in the regions against some foreign enterprises occur due to poor awareness of the local population.

“In the regions there is a lack of work of local authorities in informing the local population. Because of that, local people rise with slogans about the closure of some enterprises. We have a problem in informing and discussing with the population, and there is no harassment of investors,” Alisherov said.

Direct investment is growing. This week, it was once again announced that investments in the country is growing. This time, the Ministry of Economy of the Kyrgyz Republic announced that the inflow of foreign direct investments in Kyrgyzstan in the first half of 2019 compared to the same period in 2018 increased by 59.4% and amounted to USD 393.7 million. At the same time, the inflow exceeded the level of outflow by USD 120.7 million.

One of the important indicators is that in the first half of 2019, 75.7% of the total investment went to the regions of the Kyrgyz Republic, while in the first half of 2018 this indicator was 52.2%. In other words, the share of investments in the regions increased by 23.5%.

Kabar News Agency

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