Kyrgyzstan is waiting for aid from the EEU and international donors
The Kyrgyz government has developed an anti-crisis plan to save its economy in the context of the coronavirus pandemic. However, there is no money in the budget for its implementation. The Eurasian Economic Union (EEU), of which Kyrgyzstan has become a member since 2015, did not offer assistance. The parliament argues whether the republic needs to remain in an integration association. Bishkek still has hope for international financial institutions.
The Kyrgyz business suffered not so much from the spread of coronavirus infection (there are 228 cases in the republic), but from the state of emergency (PE) introduced on March 25 for three weeks and curfew, which provides for restrictions on the movement of citizens and vehicles in Bishkek and the southern regions of the country.
The state of emergency allowed to restrain the pace of spread of coronavirus infection, but it provoked a lot of problems. In particular, freight transportation stopped, as a result of which a significant number of Kyrgyz residents employed in servicing re-export flows to the markets of the CIS countries were left without work. The republic is dependent on the state of the economy of its main partners: Russia, China, Kazakhstan and other neighbors. A sharp decline in small and medium-sized businesses is observed; import volumes are several times higher than export volumes. Therefore, local deputies at a recent parliamentary meeting called the anti-crisis plan a fiction and expressed dissatisfaction with the infantility of the EAEU.
In particular, Abdyvakhap Nurbaev called on the government to start negotiations with the Eurasian Economic Commission on the start of lowering customs duty rates applicable to imported goods. "Can we ask for this? Or to at least lower customs tariffs? If we do not, then we will simply destroy business and the economy. We must defend this proposal. But if they are against and in such a difficult time they refuse to help, then we need to ask ourselves: do we really need such an association? ", the deputy said.
Another problem was the restrictions imposed by partner countries in the Eurasian Economic Union. In particular, Kazakhstan introduced quotas for the sale of grain and grain products. For Kyrgyzstan, it is 22 thousand tons of flour per month. According to Deputy Altynbek Sulaymanov, the establishment by Kazakhstan of a ban on the export from the country of certain types of food products, including flour, contradicts the EAEU rules on the creation of common customs borders and the provision of economic freedoms for business. “Is the Customs Union currently working? Actually, it doesn’t work. In this case, it is necessary to agree on the suspension of the EAEU regimes until the situation with the coronavirus is completed, and then each member state of the union will solve its own problems. Now, the introduction of any restrictive measures is a violation of the norms EAEU, "said Sulaimanov.
This is not the first time that deputies have said that Kyrgyzstan is inexpedient in the EAEU. Earlier, MP Kenzhebek Bokoev was indignant that the EEAS does not benefit the country and proposed withdrawing from the integration association. According to him, the promises made to Kyrgyzstan before joining the association are not kept. He believes that Kyrgyzstan "lost on all fronts, and especially in agriculture."
As a result of the meeting, the deputies adopted the anti-crisis plan of the government, according to which enterprises importing grain and those who produce flour inside the country are exempted from VAT. Details of the anti-crisis plan were presented yesterday by the Deputy Prime Minister and the head of the republican headquarters for protecting the economy from the effects of the coronavirus Erkin Asrandiev. Experts concluded that there would be no real help to the business. Those who don’t have food (according to the authorities, 210 thousand of such families) will be given food packages. Erkin Asrandiev also said that the anti-crisis plan for the next 2-3 months includes several areas. “The first is food security, the second is an indulgence for business. In particular, for taxes, social payments and utilities for three months. If these payments are overdue, there will be no fines and penalties. The deadlines for submitting a tax return have been postponed,” he recalled.
The second area is raising resources to support the business. "We are considering two sources. Use the temporarily available funds of the Russian-Kyrgyz Development Fund. Negotiations have already begun. In addition, we are negotiating with our donor partners. In particular, with the EBRD to receive from 100-150 million dollars. that 50% can be provided on a grant basis. We are also negotiating with ADB, WB, and EBR, "Erkin Asrandiev said.
He added that Kyrgyzstan will not be able to completely free business from taxes or allocate funds from the budget. "Our budget will not allow this. We must soberly assess our capabilities, we will not be able to repeat the experience of other developed countries," Asrandiev emphasized.
For the republic, the current crisis has become a challenge that, in terms of its scope and consequences, can potentially surpass even those that the country experienced after the collapse of the USSR. Experts are waiting for a quick way out of the crisis. Unlike neighboring Kazakhstan, Kyrgyzstan does not have a "safety cushion", so we have to wait for support from donors.
Kyrgyzstan was the first country to receive $ 121 million in emergency assistance from the IMF. But these funds will be directed, according to Asrandiyev, to support the budget and the costs associated with the fight against the spread of coronavirus.
At the same time, the official emphasized that a budgetary austerity policy is being pursued in terms of budgetary expenditures: first of all, expenses related to protected items are made - these are salaries to state employees, pensions and benefits, expenses related to emergency situations and the healthcare system. "All expenses associated with secondary values are suspended," said the deputy prime minister.
The World Bank will allocate $ 12 million to the fight against coronavirus. Kyrgyzstan can also count on UN support. The republic will allocate part of the funds 2 billion dollars. UN on the fight against coronavirus. This was announced the day before by UN Resident Coordinator Ozonnia Ogielo at a meeting with President Sooronbay Jeenbekov. Ozhielo noted that eight priority sectors were identified together with the Kyrgyz government, within the framework of which joint work is being carried out to counter the further spread of COVID-19, as well as to overcome its negative consequences in the socio-economic sphere.
However, Asrandiev assured that not everything is so bad, the second package of anti-crisis measures, calculated before the end of the year, aimed at reviving and restoring the economy, is being developed. "I think that it is already necessary to develop a third package that will be designed for the long term - for the next three years," he said.