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ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of March 10, 2016 No. 116

About approval of the Concept of development of the interbudget relations in the Kyrgyz Republic for 2016-2019

For the purpose of realization of reforms in development of local self-government and financial decentralization in the Kyrgyz Republic, enhancement of management system by public finances and program implementations of activities of the Government of the Kyrgyz Republic approved by the resolution of Jogorku Kenesh of the Kyrgyz Republic of November 5, 2015 No. 10-VI 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 concept of development of the interbudget relations in the Kyrgyz Republic for 2016-2019 according to appendix 1;

- The actions plan on implementation of the Concept of development of the interbudget relations in the Kyrgyz Republic for 2016-2019 (further - the Actions plan) according to appendix 2.

2. To the ministries and administrative departments, and also the local government bodies (in coordination) involved in implementation of the Actions plan:

- take exhaustive measures for ensuring implementation of the Actions plan at the scheduled time;

- annually, till January 25 of the year following reporting to provide information on the course of implementation of the Actions plan in the Ministry of Finance of the Kyrgyz Republic.

3. To the Ministry of Finance of the Kyrgyz Republic to perform monitoring and annually, till February 5, to provide information on the course of implementation of the Actions plan in Government office of the Kyrgyz Republic.

4. This resolution becomes effective after ten days from the date of official publication.

5. To impose control of execution of this resolution on department of finance and credit policy of Government office of the Kyrgyz Republic.

Prime Minister

T. Sariyev

Appendix 1

Approved by the Order of the Government of the Kyrgyz Republic of March 10, 2016 No. 116

The concept of development of the interbudget relations in the Kyrgyz Republic for 2016-2019

1. General provisions and purpose of this Concept

The system of the interbudget relations in the Kyrgyz Republic created during realization of policy of financial decentralization despite the available problems, in general conforms to the main requirements imposed to the budget process at the local level for ensuring real independence of local self-government. Basic conditions for realization of the rights of the citizens determined by the Constitution of the Kyrgyz Republic, management of the territory and satisfactions of requests for services are created to local government bodies.

Further development of reforms of local self-government requires creation of new formats of relations of state bodies and local government bodies for ensuring effective forming and execution of local budgets. New conditions on development of the budget process at the level of local self-government are necessary that found reflection in this Concept of development of the interbudget relations in the Kyrgyz Republic for 2016-2019 (further - the Concept).

This Concept is developed according to national state strategic documents: The program for transition of the Kyrgyz Republic to sustainable development for 2013-2017 approved by the resolution of Jogorku Kenesh of the Kyrgyz Republic of December 18, 2013 No. 3694-V, and the Program of activities of the Government of the Kyrgyz Republic approved by the resolution of Jogorku Kenesh of the Kyrgyz Republic of November 5, 2015 No. 10-VI.

The purpose of the Concept is creation of favorable and stable conditions on providing with financial resources of local budgets of ayylny aimags and cities of the Kyrgyz Republic, regardless of geographical arrangement and features of development of the territory.

Tasks of this Concept:

a) enhancement of interaction of state bodies, local government bodies in the interbudget relations;

b) creation of motivators for local government bodies and local communities in case of enlargement of ayylny aimags and areas within realization of administrative-territorial reform in the Kyrgyz Republic;

c) determination of the main directions on increase in profitable capacity of local government bodies;

d) creation of effective funding mechanism for state programs at the local level at the expense of means republican and local budgets;

e) enhancement of the transfer policy based on forming of incentives for local government bodies to increase in own income and expense optimization.

Basic principles of this Concept:

- balance and unity of interest of state bodies and local government bodies in the budget process;

- unity of the budget policy in the Kyrgyz Republic;

- orientation on stimulation of local government bodies on enhancement of the budget process;

- increase in responsibility and accountability of local government bodies to the population for results of the activities.

2. Prerequisites of adoption of this Concept

The beginning of reforms on financial decentralization in the Kyrgyz Republic is connected with adoption of the laws of the Kyrgyz Republic "About financial and economic bases of local self-government", "About the basic principles of the budget right in the Kyrgyz Republic".

The law of the Kyrgyz Republic "About the republican budget of the Kyrgyz Republic for 2007" establishes the new format of the interbudget relations based on following provisions:

- introduction of system of the two-level budget excluding regional and district budgets;

- the beginning of establishment of differentiations of payment commitments of the republican and local budget at the level of the area, the area, the city and the ayylny aimag;

- fixing of profitable sources to each level of the budget;

- prohibition on money withdrawal of local budgets in the republican budget;

- equalization of fiscal capacity of the territories for covering of the minimum expenses guaranteed by the state.

The new system of the interbudget relations had, certainly, positive nature. Only for 2007 growth of own income of local government bodies constituted % 30,5, at the same time the amount of the leveling grants decreased by % 75,4. Local government bodies had motivation to develop local budgets and to provide realization of requests of citizens on the current problems.

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