Kyrgyzstan

EDB investment portfolio

01/09/2018

8 projects

$105 million

1.5% of the total

EFSD investment portfolio

06/30/2017

5 projects

$330 million

5.9% of the total


Kyrgyz Republic became a full member of Eurasian Development Bank in August 2011. Its contribution to the Bank’s capital is US $100,000.

Trends

GDP

There was a sharp decline in the country’s economic growth in 1Q 2018. Apart from the Kumtor factor, the decline resulted from a decrease in the service and construction sectors. Kyrgyzstan’s GDP growth amounted to 1.3% YoY in the first quarter (+5.2% YoY in 1Q 2017).

Typical fluctuations in output at the Kumtor gold mine resulted in a decrease in overall manufacturing of 1.1% YoY. Mining industry output was down 15.5% YoY due to a reduction in metal ore and coal mining. This decline was compensated for by growth in the power and public utility sectors (electricity, water and gas), which resulted in a zero overall contribution to GDP growth from the manufacturing sector. There was a slowdown in the service sector, from 6.7% growth YoY in 4Q 2017 to 1.5% YoY in 1Q 2018. That said, the key wholesale and retail trade segment demonstrates stable growth (+3.7% YoY), while the decline in the hotel and restaurant segment resulted partially from a seasonal factor, given that the highest demand in this segment falls in the fourth quarter. A decline in the information and telecommunication sector of 5.8% YoY was an additional negative factor.

In terms of use of GDP, a trade balance surplus (due to both higher exports and lower imports), household consumption and gross domestic capital formation made a positive contribution to GDP growth in 2017.

The EEC aggregate leading indicator signals that economic growth is likely to decelerate in the short term, mainly due to a slowdown in gold mining. At the same time, other sectors continue to grow at their previous year’s rate. Lending to the construction and consumer sectors grew in March 2018, which supported economic growth. Domestic demand continues to grow and there are favorable conditions in export markets.

Inflation

Despite excise taxes for tobacco products and tariffs for telecommunication services increasing in 1Q 2018, low prices in the global and regional food markets kept inflation below its target range. Prices of alcoholic drinks and tobacco products grew by 6.5% YoY and those of services grew by 6.9% YoY. The monthly decline in prices in the global sugar market that has been ongoing since December 2017, as well as weak prices in regional grain markets resulting from high yields in Kazakhstan and Russia, contributed to a slowdown in prices in Kyrgyzstan’s consumer sector. The 12-mo increase in food prices amounted to 2.7% in 4Q 2017 and decelerated to 1.2% in 1Q 2018. This resulted in 12-mo CPI growth of 3.2%.

Low inflation is likely to have continued in the first months of 2Q 2018 in the absence of supply shocks and with the national currency stable.

International trade

Movements in the real effective exchange rate of the Kyrgyzstani som (KGS) did not affect the country’s international trade in 4Q 2017. Despite an increase in the balance of payments deficit compared to 4Q 2016, there was a surplus in the current account in 4Q 2017 (a preliminary estimate) due to lower interest payments to nonresidents, an increase in the profit reinvested by direct investors and increased remittances. The net outflow of direct investments due to principal payments on loans was partially compensated for by the growing amount of loans provided to both the public and private sectors. 

Fiscal Policy

There was a budget surplus in 1Q 2018 amounting to 1.1% of GDP. By comparison, the country saw a budget deficit in 1Q 2017 of 0.9% of GDP. This was mainly attributed to increased tax revenues, up 20.1% YoY, and decreased spending on purchasing non-financial assets (down 45.5% YoY). The share of non-tax budget revenues and transfer payments in total revenues decreased from 25.9% in 1Q 2017 to 17.4% in 1Q 2018. The rate of budget spending growth remained unchanged.

Government debt decreased by 4.1% QoQ and amounted to 57.1% of GDP as of April 1, 2018. At the same time, there was a decrease in government external debt of 4.4% QoQ, while government domestic debt increased by 16.5% QoQ.

Monetary Policy

The refinancing rate was unchanged in 1Q 2018 at 5%, within its target range of 6.25–0.25%. The upward trend in financial market interest rates that emerged in 4Q 2017 ceased in 1Q 2018. One of the reasons for this was the National Bank’s decision to resume providing liquidity to commercial banks through credit auctions. Real financial market interest rates have been of a stimulative nature for over a year, making commercial banks revise their interest rates on both liabilities and assets. Interest rates for new deposits in KGS decreased on average from 3.0% to 2.7% in 1Q 2018. The cost of loans in KGS provided to commercial banks amounted on average to 19.6% in 1Q 2018 (20.5% in 1Q 2017).

As the KGS exchange rate increased in 1Q 2018, the National Bank was a net buyer of the national currency.


08 August 2018
The Eurasian Development Bank (EDB) and Halyk Bank Kyrgyzstan entered into framework agreements for a total of US $5 million to support trade finance and SME finance programmes (Projects). The instruments were signed on 8 August 2018 by Dmitry Ladikov-Roev, Managing Director for Assets and Liabilities at the EDB, and Aikyn Kabulov, Chairman of the Management Board at Halyk Bank Kyrgyzstan. The trade finance agreement is the EDB’s first transaction of this kind in Kyrgyzstan
06 August 2018
The net profits of the Eurasian Development Bank (EDB) amounted to US $37.542 million in the first half of 2018, while the target fixed in the bank's strategy until 2022 for the whole year is at US $32 million
25 July 2018
The EDB announces the completion of the technical issue of 001P-01 bond of the nominal value of RUB 10 billion at the Moscow Stock Exchange under the programme (identification number 4-00002-L-001P-02E of 14 June 2018). The coupon rate is 7.60% per annum, the yield is 7.74%. The bond maturity is 1.5 years
19 July 2018
The Council of the Eurasian Fund for Stabilization and Development (EFSD), based on the outcomes of voting by correspondence, has approved the EFSD Annual Report 2017. The EFSD Annual report includes information on the activities undertaken by the Eurasian Development Bank in its capacity of the EFSD Resources Manager and related to manging and administering the EFSD resources in 2017
17 July 2018
Andrey Beliyaninov, Chairman of the Management Board of the Eurasian Development Bank, will talk at the Financing the Real Sector of the Economy Business Forum to take place on 19 July in Moscow
16 July 2018
Applications are invited for enrolment to the International Eurasian Integration School 2018 titled The Eurasian Economic Union: Contouring the Future. The school has been launched by the Russian International Affairs Council, the Alexander Gorchakov Public Diplomacy Fund, the Eurasian Economic Commission, and the Eurasian Development Bank
06 July 2018
The Eurasian Development Bank (EDB) opened a correspondent account for domestic payments in the Kyrgyz som with the National Bank of the Kyrgyz Republic
25 June 2018
The Council of the Eurasian Development Bank (EDB) approved the Bank’s new mid-term strategy for 2018-2022. The meeting was chaired by Bakytzhan Sagintayev, Prime Minister of the Republic of Kazakhstan and Chair of the EDB Council
04 June 2018
The Eurasian Development Bank’s (EDB) delegation headed by Andrey Beliyaninov, Chairman of the Management Board, took part in the Third Annual Meeting of the New Development Bank (NDB) in Shanghai on 28-29 May
29 May 2018
In Q1 2018, multilateral development banks (MDB) approved finance for CIS investment projects for a total of US $2 billion, with sovereign finance accounting for 54% and the private sector 46%

Bishkek Representative Office

Address:
21 Erkindik Blvd., Bishkek, 720040, Kyrgyz Republic