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ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of June 9, 2020 No. 315

About approval of the Financing of Subjects of Entrepreneurship Program

For the purpose of recovery and ensuring economic and social stability, support of subjects of business activity in coronavirus distribution terms, according to articles 10 and 17 of the constitutional Law of the Kyrgyz Republic "About the Government of the Kyrgyz Republic" the Government of the Kyrgyz Republic decides:

1. Approve the Financing of Subjects of Entrepreneurship Program according to appendix (further - the Program).

2. To the Ministry of Finance of the Kyrgyz Republic:

1) to dig up financial resources from internal and external sources on crediting of subjects of entrepreneurship taking into account budgetary appropriations and arrangements with the international partners in development and to allocate financial resources for crediting of subjects of entrepreneurship according to the Program;

2) to open in National Bank of the Kyrgyz Republic the special account for accumulation of the means arriving from subjects on account of repayment of the credits obtained according to the Program. The means which are saved up on this account to direct on further crediting of subjects of entrepreneurship through the selected commercial banks according to the Program.

3. Under the Government of the Kyrgyz Republic timely to represent to the State Tax Service to the commercial banks and the microfinancial organizations participating in implementation of the above-stated Program, information on application of components of digitalization of tax procedures by subjects of entrepreneurship.

4. To impose control of execution of this resolution on department of economy and investments, department of financial and credit policy of Government office of the Kyrgyz Republic.

5. This resolution becomes effective from the date of official publication.

Acting as Prime Minister, first vice-Prime Minister of the Kyrgyz Republic

K. Boronov

Appendix

to the Order of the Government of the Kyrgyz Republic of June 9, 2020 No. 315

Financing of Subjects of Entrepreneurship program

1. Introduction

The pandemic of coronavirus mentioned the whole world. The International Monetary Fund predicts recession of world economy for 3 percent in 2020 - much stronger, than in 2009. According to the forecast of the IMF, in 2020 GDP of Kyrgyzstan will decrease by 4 percent.

The prospects of growth of world economy in 2020 are extremely uncertain. It is predicted that world trade will be reduced by 10-13 percent that as a result will lead to loss about 45-50 million workplaces, to growth of unemployment and social tension.

Influence of pandemic on economies of state members of EEU will depend substantially on duration of rationing arrangements and speed of recovery of world economy. In this regard impact of pandemic on state members of EEU will be various depending on the taken rationing arrangements. Possibilities of state members of EEU on support of economy are also various: if Russia and Kazakhstan have potential for direct subsidizing of sectors of economy, then Armenia, external sources of support are forced to look for Kyrgyzstan, to address the international organizations.

The Ministry of Economics Kyrgyz the Republic predicts the expected recession of economic development of the Kyrgyz Republic in 2020 and the beginning of recovery from the crisis since 2021.

The introduced restrictions on border with neighboring countries led to reducing the external demand and the offer, and acceptance of necessary measures for control of spread of koronavirusny infection led to decrease in economic activity. Work of small and medium business, in the sphere of construction, and also number of the companies of industrial production is suspended almost in full, the service industry fell into the most vulnerable state.

2. The business sectors planned to support

Priority business sectors for scope are determined by the Financing of Subjects of Entrepreneurship Program (further - the Program) taking into account the following factors:

- assistance to preserving existing and creation of new workplaces in the conditions of growth of number of the unemployed and return of labor migrants;

- support of the most cost-efficient business areas for forming of perhaps bigger contribution to GDP growth of the country;

- support of the business areas having multiplicative impact on development of other types of economic activity;

- need of improvement of level of food security of the country;

- providing population and health care system with protective equipment and the most demanded medical supplies of internal production.

The research of data of National Statistical Committee of the Kyrgyz Republic shows that in the period of before pandemic the business sector with involvement of large number of workplaces was the processing industry, providing 12 percent from total number occupied in the country and 14,3 of percent of contribution to GDP. Considering the situation connected with spread of coronavirus and the taken measures for fight against koronavirusny infection in the industry in 2020 growth at the percent 95,3 level is expected. Within the project it is planned to cover soft credits the following business sectors:

- production of foodstuff (provides 14,4 of percent of workplaces in the industry). The Ministry of Economics of the Kyrgyz Republic predicts delay of production volumes of foodstuff (including drinks) and tobacco products in 2020 to the percent 103,6 level. The food industry in the conditions of pandemic plays important role in ensuring food security within the country;

- textile production, production of clothes and footwear, skin and other leather products (provides 33 percent of workplaces in the industry). In connection with the current situation and negative consequences in the form of restrictions in raw materials supply indicators for 2020 are expected at the level of 90 percent. This sector is the most priority on scope workplaces;

- production of rubber and plastic products, other mineral products (provides 8,7 of percent of workplaces in the industry). Growth rate of production volumes of construction materials in 2020 is planned at the percent 80,2 level because of the expected decrease in business and investment activity in the construction sector. Production of construction materials has multiplicative impact on construction industry;

- for the purpose of assistance to internal production of remedies and medical supplies for health care system support of pharmaceutical industry of processing industry is planned;

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