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ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of June 15, 2016 No. 325

About approval of the Concept of development of guarantee funds of the Kyrgyz Republic till 2020

For the purpose of ensuring access of subjects of small and medium business to credit and other financial resources, increase in their export potential by development of system of guarantee funds, "About the Government of the Kyrgyz Republic" the Government of the Kyrgyz Republic decides program implementations of the Government of the Kyrgyz Republic "Trust and unity" approved by the resolution of Jogorku Kenesh of the Kyrgyz Republic of April 13, 2016 according to articles 10 and 17 of the constitutional Law of the Kyrgyz Republic:

1. Approve:

- The concept of development of guarantee funds of the Kyrgyz Republic till 2020 (further - the Concept) according to appendix 1;

- The action plan on implementation of the Concept of development of guarantee funds of the Kyrgyz Republic till 2020 (further - the Action plan) according to appendix 2.

2. To the ministries, administrative departments, plenipotentiaries of the Government of the Kyrgyz Republic in areas, local public administrations and local government bodies (in coordination):

- take measures for implementation of the Concept and the Action plan;

- in two-month time to develop and approve departmental programs and actions plans for implementation of the Concept and Action plan.

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

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

Prime Minister

S.Zheenbekov

Appendix 1

The concept of development of guarantee funds of the Kyrgyz Republic till 2020

1. Overall assessment of the current situation

Support of small business at the level of the state in the Kyrgyz Republic is one of important issues of development of national economy. Limited access to financial opportunities of subjects of small and medium business, insufficiency of pledge for receipt of necessary credit amount in banks, high interest rates on the credits in bank system slow down dynamic development of small and medium business.

About 40-50 percent of the potential borrowers of the Kyrgyz Republic who addressed to banks do not receive required credit amount for development of the business because of insufficiency of pledge. The insufficient offer of credit resources of bank system in case of great demand for them does not allow to reduce loan interest rates.

For the solution of the matter in 2011-2013 the new financial system - guarantee funds which provide guarantees to the entrepreneur on part of necessary credit amount in case of insufficiency of pledge was created.

Guarantee funds are created for assistance to financing of small and medium business and are one of the basic organizations of their support. The main objective of guarantee funds - provision to entrepreneurs of guarantee on the credits in banks, to agreements of leasing in case of insufficiency of pledge.

Guarantee funds are the universal organizations for provision of guarantees according to the Law of the Kyrgyz Republic "About guarantee funds in the Kyrgyz Republic". Depending on the list of founders they can function in the territory of the republic or the region.

In the Kyrgyz Republic now guarantee funds are regional (municipal) as founders of guarantee funds are local government bodies and they act on the region territory in the place of their creation. The law of the Kyrgyz Republic "About guarantee funds in the Kyrgyz Republic" provides creation of guarantee funds in the form of joint-stock companies, limited liability companies, cooperatives, funds, organizations.

This Concept is directed to realization of the National sustainability strategy of the Kyrgyz Republic for 2013-2017 approved by the Presidential decree of the Kyrgyz Republic of January 21, 2013 No. 11, of the Program of the Kyrgyz Republic for transition to sustainable development for 2013-2017, approved by the order of the Government of the Kyrgyz Republic of April 30, 2013 No. 218, of the Kyrgyz Republic approved by the resolution of Jogorku Kenesh of December 18, 2013 No. 3694-V and considers key measures of the Government of the Kyrgyz Republic, the interested ministries and departments, National Bank of the Kyrgyz Republic, commercial banks, business associations and other interested structures in its further realization.

In the Kyrgyz Republic guarantee funds function in four areas (in the cities of Kara-Balta, Karakol, Osh, Jalal-Abad, Kant and the Saraysky ayylny aimag of the Cara-Suysky district of the Osh region). The guarantee fund Karakol acts on all territory of the Issyk kul region, other guarantee funds - within the territory of the municipality.

All guarantee funds are members of Association of guarantee funds of the Kyrgyz Republic. The association of guarantee funds of the Kyrgyz Republic became the member of Association of guarantee funds of the European Union since October, 2014.

From 2011 till December 31, 2015 it is possible to refer the following to results of activities of guarantee funds:

- the quantity of guarantee funds reached 6;

- the capital constituted 33 million som;

- the quantity of guarantees issued made 404 units;

- the amount of guarantees constituted 39 million som;

- the amount of the issued credits banks constituted 190 million som;

- the profit of the entrepreneurs who obtained guarantees constituted more than 600 million som;

- it is created new workplaces in number of 342 units;

- it is kept the operating workplaces in number of 892 units;

- recoverability of guarantees makes 100 percent;

- the budget more than 5 million som arrived taxes in local.

The priority directions of provision of guarantees are production, agricultural industry and conversion of agricultural products, service and trade.

2. Achievements and problems

For the purpose of rendering assistance to development of small and medium business by means of guarantee funds the following positive results were achieved:

- the Law of the Kyrgyz Republic "About guarantee funds in the Kyrgyz Republic" is adopted;

- six guarantee funds in various regions of the Kyrgyz Republic which give help to small and medium business in receipt of necessary credit amount in case of insufficiency of pledge are created and function;

- researches of the level of development of system of guarantee funds for 2011-2014 by Association of guarantee funds of the Kyrgyz Republic by request of Asian Development Bank are conducted;

- the book "Guarantee Fund as Instrument of Development of Small and Medium Business" is prepared and published;

- with implementation of institute of guarantee funds interest in cooperation with them from National Bank of the Kyrgyz Republic and commercial banks is observed.

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