BISHKEK (TCA) — Kyrgyzstan will allocate 20.1 billion soms for repayment of the public debt in 2017, Minister of Finance Adylbek Kasymaliev said at the public hearing of the country’s draft budget for the next year. Of these, 11 billion soms will be allocated for the repayment of the external debt and 9 billion for the domestic debt. In subsequent years, this amount will grow to 26.9 billion soms in 2018 and to 29.2 billion soms in 2019.
The Parliament has discussed the draft budget without going into details. Meanwhile, the MPs should carefully understand and analyze the budget’s revenue and expenditure, and particularly the public debt.
Living in debt
The state budget is not covering the urgent needs of society for a long time. According to experts, the government has led the country to bankruptcy over 25 years of the country’s independence.
Since the 1990s, Kyrgyzstan has been living in debt and appealed to international organizations for loans and grants, which were spent for the public debt service. Kyrgyzstan’s foreign debt has already exceeded $4 billion, and to repay it the country will have to pay $200 million annually for 20 years.
According to experts, the money earned by the country is only enough to cover 65% of budget expenditures.
This year, 9.8 billion soms will be spent for external debt service, of which 3.7 billion soms will be allocated for the payment of interests on loans and 6.1 billion soms for the repayment of the principal debt.
During his visit to Bishkek in August 2012, President of Kazakhstan Nursultan Nazarbayev advised Kyrgyzstan’s citizens to work more and not to rely on loans and foreign aid only. Kyrgyzstan should create more jobs, he said. “It is impossible to raise the country by humanitarian assistance and loans only,” Nazarbayev then stressed.
Low indicators
The country’s economic indicators remain low in the first seven months of 2016, Prime Minister Sooronbai Jeenbekov said. GDP has reduced by 1.2%, exports decreased by 28.4% and tax revenues by 1.4 billion soms.
The Government says the reduction in exports is due to different statistical methods used before Kyrgyzstan’s entry to the Eurasian Economic Union and now.
Poor tax base
The State Tax Service of Kyrgyzstan (STS) did not fulfill the tax collection plan for the first half of 2016. The STS collected 31.06 billion soms in taxes, with the plan of 32.59 billion soms. However, tax revenues have increased by 8.96 billion soms (40.5%) compared to the same period of 2015.
The tax base has been depleted due to the lack of large enterprises. Apart from the Kumtor gold mine, there are few running businesses including the Kant Cement and Slates Plant, Tokmak Glass Factory and Mailu-Suu Electric-bulb Plant. The country’s budget is mainly supported by the import of goods.
According to experts, due to the lack of money, the funding of healthcare, education, culture, science, roads, water management and land reclamation has been reduced tenfold compared to 1991. The Finance Ministry used to reduce the funding of the social sector by up to 30%. So the Healthcare Ministry received only 15 billion soms instead of the planned 20 billion soms in 2015.
Amending the budget
The Finance Ministry can revise any budget item and the Parliamentary Finance Committee often proposes amending certain budget items at the end of a year.
The ministry proposes to decrease the revenue part of the state budget for 2017 down to 126.5 billion soms against 141.3 billion in 2016. The expenditures of the national budget for 2017, on the contrary, have been increased by 27 billion soms compared to 2015, up to 146.9 billion soms.
Hope on mining and SMEs
The Government pins hopes on the mining sector, including the Kumtor gold mine, which would allow the country to achieve the planned 2.9-percent GDP growth in the second half of this year.
The Government expects that the business will come out of the shadows and will increase domestic investment.
There is a hope on the newly-created Guarantee Fund, which should solve the problem of collateral for small and medium-sized businesses. About 72 million soms will be provided for the Fund’s capitalization. The Asian Development Bank also plans to allocate a $3 million grant to the Guarantee Fund.
The Government also pledges to improve the business environment, including the reduction and streamlining of inspections and simplifying the provision of fiscal incentives.
