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ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC AND NATIONAL BANK OF THE KYRGYZ REPUBLIC

of March 30, 2021 No. 120/10-1

About the Joint statement of the Government of the Kyrgyz Republic and National Bank of the Kyrgyz Republic on the main directions of economic policy for 2021

For the purpose of determination and realization of the main directions of economic policy for 2021, according to articles 10 and 17 of the constitutional Law of the Kyrgyz Republic "About the Government of the Kyrgyz Republic", articles 17 and 46 of the Law of the Kyrgyz Republic "About National Bank of the Kyrgyz Republic, banks and banking activity" the Government of the Kyrgyz Republic and National Bank of the Kyrgyz Republic decide:

1. Approve the Joint statement of the Government of the Kyrgyz Republic and National Bank of the Kyrgyz Republic on the main directions of economic policy for 2021 according to appendix.

2. This resolution becomes effective after seven days from the date of official publication.

 

Prime Minister of the Kyrgyz Republic

U. Maripov

Chairman of National Bank of the Kyrgyz Republic

T. Abdygulov

Appendix

The joint statement of the Government of the Kyrgyz Republic and National Bank of the Kyrgyz Republic on the main directions of economic policy for 2021

2020 was not simplest year for mankind, and we appeared in new reality because of pandemic of COVID-19, which introduced amendments in development of world and national economy.

COVID-19 pandemic with trade wars, protectionism, and also volatile price performance on energy resources cast world economy into the deepest recession since World War II. Transnational commercial intercourses and supply chains were broken, the consumer demand was reduced, millions of people were left without work. Because of pandemic by the beginning of 2021 from 110 to 150 million people in the world appeared in poverty.

Because of application of rationing arrangements economic activity in all countries was significantly slowed down, recession of world trade, according to preliminary estimates the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) respectively continued, in 2020 world trade in general was reduced by % 14,5, and this biggest reducing since 2009 when recession constituted 22%.

Having faced the crisis caused by coronavirus, the governments put mechanisms of financial stimulation in action worldwide. Budgetary appropriations which amount reached 10-20% of GDP were directed to maintenance of health care systems and fight against pandemic, and also preserving means of livelihood of citizens.

In these conditions, for the purpose of anticipation of deep economic downturn, support of activities of subjects of entrepreneurship and the population by the Government of the Kyrgyz Republic (further - the Government) together with National Bank of the Kyrgyz Republic (further - National Bank) immediate measures of support and priming of economy for its stabilization were taken. The Packet of measures for smoothing of negative impact on national economy was accepted, are developed for support of subjects of entrepreneurship and fiscal and financial measures of support were implemented.

However the social and political event which took place in the country in October which increased gap of negative dynamics aggravated state of the economy of the Kyrgyz Republic.

As a result, by provisional estimate of National Statistical Committee, in the Kyrgyz Republic the level of economic downturn for 2020, along with Armenia (-% 7,5), developed high among the countries of EEU and constituted (-) % 8,6: in Russia decrease constituted 3,1 of %, Belarus - % 0,9, Kazakhstan - % 2,6, at the same time in China since August, 2020 because of gradual removal of quarantine restrictions recovery of economic activity where the economy grew by % 2,3 is observed.

Coordinated monetary and tax and budget politicians promoted deduction of annual average value of inflation (January-December, 2020 by January-December, 2019) within medium-term target reference point in % 5,0-7,0 which constituted % 6,3.

Against the background of increase in expenses for support of the population and activities of subjects of entrepreneurship, the extent of budget deficit grew and for 2020 constituted % 3,3 to GDP.

Volatility of the exchange rate of US dollar in relation to som, owing to influence of global changes, led to the sharp growth of level of public debt which as of December 31, 2020 constituted % 68,1 to GDP.

Despite the current situation, the Government managed to provide timely accomplishment of all planned obligations of the state in the field of social protection and provision of pensions.

For the purpose of ensuring further support of living standards of pensioners since October 1, 2020, according to the orders of the Government of the Kyrgyz Republic of September 11, 2020 No. 480 and 481 carries out indexation basic and insurance parts of pension.

Now the world is in turbulence condition. The remaining uncertainty of dynamics of world economy and the financial markets is aggravated with negative impact of pandemic of coronavirus (incidence in the fourth quarter 2020 and at the beginning of 2021 sharply grew that forced to keep the governments of the countries or again to enter measures for mitigation of sharpness of crisis). There was risk of long low growth of economies. The majority of the countries of the world actively work on estimates of economic losses because of pandemic and develop programs and plans of post-crisis recovery of economies.

Events of 2020 bared numerous problems in health care system, educations, ensuring food security, structure of economy. In this regard carrying out complex reforms is necessary.

For timely response to changes of economic situation and development of recommendations about support and development of business and investing activities, and also to increase in competitiveness of economy Council for economic reforms under the Government of the Kyrgyz Republic is formed.

Due to the dynamism of the taking place events, emergence of new challenges updating of the main reference points / directions and measures of policy reflected in the National strategy of development for the Kyrgyz Republic for 2018-2040 is necessary.

According to assessment, growth of economy in 2021 will be moderate as new flashes of incidence of COVID-19 constantly undermine business activity. It is expected that economic revival will be promoted distribution of efficient vaccination, preserving measures of economic support, gradual recovery of the internal and external demand.

The Plan of the Government of the Kyrgyz Republic for 2021 providing measures for support of small and medium business, export-import transactions and investor protection, ensuring stability of the government budget, support of social stability, ensuring food security and projects implementation of development in the conditions of crisis is developed.

The main priority - improvement of quality of life and growth in prosperity of the population.

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