Kyrgyzstan Business & Economy - The Times Of Central Asia

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Kyrgyz Banks Try to “Warm Up” Economy With Interest Rate Cut

Commercial banks in Kyrgyzstan are expected to reduce interest rates on loans, with the National Bank of Kyrgyzstan (NBKR) lowering the rate from 13% to 11%. However, experts believe that the regulator's decision will not affect the banking sector. "We expect that now the market offers on deposits and loans will be revised. But time is needed for this. Commercial banks, financial organizations have to adapt their conditions. If currently the interest rates on loans average more than 15%, then a revision of rates is expected," Aida Karabayeva, head of the NBKR communications department, told a press conference in Bishkek. The rate cut is an attempt to warm up Kyrgyzstan's economy, weaken the national currency and increase export revenues, economists said. Thanks to the weakening of the Russian ruble against the Kyrgyz som, inflation in the country has fallen from 7.3% to 5.2%. This gives domestic producers and exporters room to maneuver. "At the moment we see that inflation risks are weakening. Previously, the tightening of monetary policy by the National Bank controlled the saving behavior of the population and the banking sector. This helps to ensure that the national currency does not depreciate," Ainura Mambetkul kyzy, head of the National Bank's economic department, told The Times of Central Asia. However, the situation has changed recently, Mambetkul kyzy said. Kyrgyzstan has enough finances to increase lending. This creates conditions for the growth of purchasing power of the population. And as a consequence, economic growth. Despite the confidence of the financial regulator, commercial banks are in no hurry to reduce interest rates on loans. In any case, they are waiting for the next statement of the financial regulator, in May this year. The fact is that Kyrgyzstan's banking system operates according to its own, domestic standards -- most of the borrowed funds are raised abroad by the second tier banks, or use citizens' deposit savings. Maerim Askarbekova, director of Senti financial company, commented: "The practice is that a decrease in the discount rate leads to a general decrease in rates in the whole market. This applies to both loans and deposits. Deposits, on the other hand, directly affect the bond market. The decrease in the discount rate affects the decrease in the price of money on the market. And if the loan that the bank has taken for its operations has foreign roots, the bank will demand lower interest rates. But, in any case, the NBKR interest rate is a benchmark."

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Kyrgyzstan’s New 5,000 Som Banknotes Enter Circulation

A new banknote worth 5,000 som (U$56.60) has been put into circulation in Kyrgyzstan starting today, the National Bank of the Kyrgyz Republic has announced. The 5,000 som banknote is part of the new fifth series of the national currency, produced from a 2023 sample, and went into circulation on May 10, 2024. The new banknote contains a portrait of the renowned Kyrgyz actor and artist, Suymenkul Chokmorov on the front side, and a depiction of the famed movie theater, Ala-Too, on the obeverse. The main color and size of the banknote has remained unchanged. "The banknote of 5,000 som nominal value contains a three-level complex of modern security elements, providing reliable protection against counterfeiting. All banknotes of the national currency have the status of official means of payment in the Kyrgyz Republic and are subject to mandatory acceptance as a means of payment regardless of the year of issue," the national bank's press service stated. The first series of banknotes of Kyrgyzstan's national currency were introduced on May 10, 1993. The exchange rate then was set at 200 Soviet rubles to one Kyrgyz som.

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UNDP Supports Export Promotion Center in Kyrgyzstan

A much welcomed export development and promotion center has been launched in Kyrgyzstan with support from the United Nations Development Programme (UNDP). According to a report by the UNDP in Kyrgyzstan on May 7, the key aim of the Kyrgyz Export Center is to offer advice and equip Kyrgyz companies with skills and knowledge to navigate and succeed in international trade. Local businesses are promised access to a wide range of beneficial services including the provision of data and analysis of potential international markets and step-by-step guidance in entering foreign markets. Help will also be available to enable companies to fully exploit their export potential through programs tailored to maximize growth and competitiveness. In addition, local companies will be encouraged and offered support to participate in trade missions and international exhibitions through which they can showcase their products to a global audience. Emphasizing the organization’s commitment to best international practices, Urmat Takirov, director of the Kyrgyz Export Center, stated, “We strive to apply the best practices and approaches adopted in international business to ensure the best results in the development of export-oriented companies in Kyrgyzstan.”

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Kazakhstan, Kyrgyzstan, and Uzbekistan Favor EEU Economic Integration

On May 8, Russian President Vladimir Putin, President of Belarus Alexander Lukashenko, President of Kazakhstan Kassym-Jomart Tokayev, President of Kyrgyzstan Sadyr Japarov, and Prime Minister of Armenia Nikol Pashinyan convened in Moscow for a meeting of the Supreme Eurasian Economic Council - the governing body of the Eurasian Economic Union (EEU). The event, which marked the tenth anniversary of the establishment of the Russian-led economic integration bloc, was also attended by heads of the EEU observer states, President of Cuba Miguel Diaz-Canel Bermudez and President of Uzbekistan Shavkat Mirziyoyev. In his address, Kazakhstan President Tokayev remarked that in the relatively short period since the Treaty on the Eurasian Economic Union was signed in Astana ten years ago, cooperation between the parties has contributed greatly to the development of Kazakhstan’s economy, and stated: “The correctness of the chosen vector of development of our association has been confirmed by the macroeconomic results of the past decade. Thus, Kazakhstan’s trade turnover with the EEU member countries has increased 1.7-fold and reached $28.5 billion.” Referencing the positive potential for EEU cooperation with rapidly developing countries in Asia, Africa, and the Middle East, he urged EEU member states to join the Ashgabat Agreement on the creation of an International Transport Corridor to engage with markets in the Persian Gulf. The Kazakh president also emphasized the need for improvements to trade links between Europe and Asia, North and South, and warned that unless renewed, the existing infrastructure in the Eurasian region will continue to deteriorate. Citing the modernization and expansion of transport and logistics infrastructure as a key priority, he stated, “In Kazakhstan, we plan to repair 11,000 and build over 5,000 kilometers of new railways by 2030. As part of the Belt and Road initiative, a Kazakh terminal, built in the Chinese city of Xi’an, accounts for up to 40% of all container traffic on the China-Europe route. There are also plans to launch 5 cross-border transport and logistics hubs on Kazakhstan’s borders with Russia, China, Uzbekistan, and Kyrgyzstan, and on the Caspian Sea.” Kyrgyz President Japarov announced that further development of Eurasian economic integration, including the creation of a single market for goods and services without barriers, a common energy market, and freedom of movement of labor resources, remains a priority for Kyrgyzstan. Regarding benefits afforded by Kyrgyzstan’s membership of the EEU, Japarov said that the country’s trade with EEU member states has grown by 76%, from $2.5 billion to $4.4 billion, its exports to EEU countries have tripled from $410 million to $1.23 billion, and its imports increased by more than 50%, from $2 billion to $3 billion. Apart from gold, 80% of Kyrgyzstan’s exports go to the EEU countries. The Kyrgyz president also emphasized the importance of linking the EEU and the Chinese Belt and Road initiative. Despite the current observer status of his country and the EEU, Uzbek President Mirziyoyev reported that over the past three years, trade between Uzbekistan and the EEU has grown by 60 percent. Looking ahead, he announced, “Uzbekistan is interested in expanding practical partnership and...

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New UN Program to Help Kyrgyz Apiaries Develop Export of Honey

The United Nations Development Program (UNDP) in Kyrgyzstan, in cooperation with the Training and Advisory Services Center (TES-Center) Foundation, is launching an initiative to strengthen the value chain of natural honey for export, according to a report on the official UNDP website. The project will be funded by the Government of Finland and implemented in the Osh, Naryn, and Issyk-Kul regions. The authors of the initiative believe that Kyrgyzstan has significant potential for the production and export of honey. However, this requires a coordinated effort. "We support beekeepers in increasing their productivity and competitiveness of their natural honey, taking into account the introduction of innovative and resource-efficient green technologies, which will stimulate [sustainable] exports and the creation of new green jobs. The program is also aimed at integrating small farmers into the process of value addition," said Aisuluu Mambetkazieva, the UNDP Trade Facilitation Project Coordinator. The project will support beekeepers and their apiaries, exporters, service operators, and the local authorities. Special attention will be paid to the inclusion of women and people with disabilities, as well as environmental sustainability in the sector. The project is expected to generate at least 120 jobs, including those for women, in rural areas. The project will also provide capacity building for honey processing and export enterprises. Participants will be trained in the use of online marketplaces and e-commerce platforms.

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Kumtor Gold Boosts Kyrgyzstan Economy

On May 7, Chairman of the Cabinet of Ministers of the Kyrgyz Republic Akylbek Japarov inspected the Kumtor gold mine in the permafrost zone of the Issyk-Kul region. Sitting 4,000 meters above sea level, the mine serves one of the world’s ten largest gold deposits and prior to being nationalized in 2021, was owned by Canadian company, Centerra Gold. The mine now has over 3,000 employees, 99.9% of whom are local specialists, and more than 800 specialist vehicles, machinery and equipment to ensure uninterrupted production. With reference to the significant developments to the site since nationalisation, the Prime Minister emphasized the importance of the state’s role in maintaining its efficient operation. Last year, the mine generated 17.2 billion soms (over $194 million) in taxes and social payments - equivalent to roughly one-third of Kyrgyzstan’s state budget. Japarov also inspected Kumtor’s underground gold mining project, which launched in February, will enable the further extraction of about 115 tons of gold. At Kumtor’s open-pit mine, it currently takes one ton of processed ore and over 40 tons of extracted waste rock to produce 5-7 grams of gold. Underground mining has the potential to double that yield with less damage to the environment than its open-pit equivalent. Further to the prime minister’s visit, it was reported that from 2026, mining will begin on ore waste stored at the Kumtor mine tailings and according to estimates, will produce an additional 120 tons of gold. In 2023, the Kumtor mine produced 13,567 tons of gold, with a total revenue of $848 million, and net profit of $302.5 million.