Policy responses for Kyrgyzstan - HSRM


Policy responses for Kyrgyzstan

6. Measures in other sectors

6.1 Measures in other sectors

Many MEASURES IN OTHER SECTORS beyond the immediate scope of the health system are being taken to prevent further spread of the virus. This section contains information on many of these areas, including border and travel restrictions and economic and fiscal measures, among others.

• Borders and mobility (transport)
Foreign citizens are temporarily restricted to enter Kyrgyzstan, starting from 22 March 2020. However, the borders remain open for goods. The lockdown of Bishkek and Osh cities has been lifted.  Public city transport resumed the work since 25 May 2020, the bus service between the regions of Kyrgyzstan relaunched since 5 June. Compliance with sanitary safety requirements by public transport and passengers is being controlled. Passengers should wear masks and their temperature should be measured before travel. As Bishkek remains the epicenter of the infection in Kyrgyzstan, with high transmission risks, the travel to the capital city without serious reasons is not recommended. The taxi drivers must maintain all sanitary requirements, work in masks, gloves and not carry more than 2 passengers. All passengers must wear masks and maintain a safe distance.

Source: Joint order of the Ministry of Transport and Roads, the Ministry of Health and the Ministry of Internal Affairs No. 150/378/375 dated from 4 June on Mechanisms of implementation of algorithms of actions to prevent spread of COVID-19 in passenger transportation on bus routes. 

By August 2020, Kyrgyzstan had changed the algorithm for persons entering the country. According to the new regulation, the PCR analysis on arrival is not carried out, and passengers are not placed under observation. They fill out a questionnaire, install a mobile application and are released home. If there are symptoms of SARS or flu, citizens should consult a doctor in their place of residence.

The Kyrgyz government has relaxed the entry restrictions for foreign nationals and stateless persons. Foreign nationals and stateless persons are allowed to enter Kyrgyzstan if they study in educational institutions in Kyrgyzstan, if they have permanent resident cards, if they need to obtain medical care in Kyrgyzstan or attend funerals of close relatives. In all of these cases, foreign nationals or stateless persons should present proof. The government has made the decision on a phased reopening of borders for foreign nationals as part of economic measures aimed to minimize the adverse effects of the coronavirus pandemic. The Ministry of Health will revise the list of foreign countries twice a month. Nationals of the foreign countries included on the list will be allowed to enter Kyrgyzstan.

• Economy and state aid
The government of Kyrgyzstan has recognized the COVID-19 outbreak as a force majeure situation for affected businesses, Prime Minister Muhamedkaly Abilgaziev noted on 8 May. This will help affected businesses with their tax, customs, social and non-tax payments. Taxpayers can submit applications for deferrals or installment plans on tax debts without bank guarantee documents.

The Government plans to provide maximum assistance to businesses, individual entrepreneurs and citizens through financial and tax incentives after the resumption of economic activities, including tax and social payment deferrals for debt arising from the introduction of the state of emergency from 22 March  2020; extension of the deadline for submitting tax returns for individuals and individual entrepreneurs until 1 April 2021; recommendations to municipal organizations and service providers to provide payment extensions for electricity, water, gas and other utilities, communication services and the Internet, due to the presence of subscriber debt without charging penalties; providing a deferral of payments for renting state properties and other measures. The National Bank was assigned to work with commercial banks to prolong and restructure commercial loans for a period of at least 3 months. 

The Government uses the available reserves to support socially vulnerable groups. Ten thousand tons of flour were dispersed from the State Material Reserves Fund under the Government.

The Ministry of Labour and Social Development together with the heads of districts and local governments developed the lists of citizens who need additional social assistance and provided them with flour. Managers in the centre and in the field are personally responsible for ensuring that no citizen is forgotten.

The Ministry of Education and Science issued an order on 23 March to switch the education process in higher and secondary vocational schools to distance learning methods. There is a plan to start the last semester of school education of the school year 2019-2020 on 8 April via distance learning. 

The outbreak of the pandemic has weakened the macroeconomic outlook for Kyrgyzstan and opened a balance of payments gap estimated at about USD 400 million. There is an unprecedented high level of uncertainty surrounding this projection. The IMF support helps provide a backstop, increase buffers, and shore up confidence for the Kyrgyz economy. It also helps catalyze donor support and preserve fiscal space for essential COVID-19-related health expenditure.

By 12 May, Kyrgyzstan has received USD 120.9 million from the IMF and negotiations on foreign aid of USD 50-60 million are underway. USD 120.9 million from the IMF was provided as loan with half at 0.5% interest rate per year and the other at 0.7% per year for 15 years.

On 28 May Kyrgyzstan had agreements on financial assistance from international donors amounting to over $462 million: $242 million in loans have been received from the International Monetary Fund in two instalments. The loan is aimed at covering the state budget gap. By early June, $50 million is expected from the Asian Development Bank, half of which will be received in grants. The second instalment of $50 million will be sent after approval by the ADB Board of Directors. The two instalments will be used for budget support. The German Development Bank's $30,352,500 will be used to support farmers to ensure food security.

On 19 May the Parliamentary committee on budget and finance considered draft amendments to the state budget law for 2020 and the forecast for 2021-2022. As per the Finance Minister, Baktygul Jeenbayeva, the revenues are proposed at 134.6 billion soms and expenditures at 162.6 billion soms.  Expenditures have been added. The deficit will be 27.9 billion soms: there is a difference of 20 billion soms with the previous deficit (7.9 billion soms).

On 9 June the President of Kyrgyzstan, Sooronbai Jeenbekov, signed into law the amendments to the state budget of the Kyrgyz Republic for 2020 and the forecast for 2021-2022.  The state budget is approved with revenues of 135,346,827,200 soms; expenditures of 163,039,088,400 soms; and a budget deficit of 27,692,261,200 soms. Real GDP growth in 2020 is projected to be -5% instead of the anticipated 5%. According to amendments, tax revenues are reduced by 31 billion soms. The income part decreases by 28.3 billion soms, expenditure part - by 8.627 billion soms. The deficit increases by 19.73 billion soms.

The Ministry of Finance and the Eurasian Development Bank have signed a $100 million loan agreement for budget support amid the coronavirus pandemic, according to the website of the Ministry of Finance. The loan will be provided by the Eurasian Fund for Stabilization and Development. The Council of the Eurasian Fund for Stabilization and Development earlier approved $100 million loan for budget support for Kyrgyzstan. The loan will be used to support implementation of the program of the government and the National Bank of Kyrgyzstan to address impacts of the COVID-19 pandemic on the economy, as well as the financial and social sectors. The loan will be provided at 1% per annum with a maturity period of 20 years, and a 10-year grace period. The interest rate will be 0.25% in the first year. The Eurasian Fund for Stabilization and Development (the former EURASEC Anti-Crisis Fund) is a regional financial arrangement in the amount of US$ 8.513 billion established by Armenia, Belarus, Kazakhstan, Kyrgyz Republic, Russia, and Tajikistan to overcome negative consequences of the crisis, to provide long-run sustainability, and to foster economic integration of EFSD member countries.

The tax shortfall is projected at 4.5 billion soms. Work on attracting external funding to cover the budget gap is under way. The government is in talks with the European Union on USD 9.9 million and USD 5.4 million programmes, USD 2.5 million from the World Bank, and USD 24.8 million or 2.2 billion soms from the ADB.

Non-tax revenues are projected at 25.5 billion soms, or 652 million soms less than planned over 2020.

Expenditures of the state budget have been cut by 10.3 billion soms and will amount to 161.3 billion soms.

Capital investments have been cut by 1 billion soms, regional development by 1 billion soms, targeted transfers by 1.2 billion soms, non-priority expenditures of departments by 5.9 billion soms, and nationwide payments by 1.6 billion soms. 

State investment financing from all sources will amount to 32.1 billion soms in 2020.  30.1 billion soms, or 97%, will be financed through grants and loans from outside. The main sources of budget financing in 2020 are the World Bank (28%), the Arab Coordination Group (27%), ADB (11%), China (8%), and the European Investment Bank (12%).  Financing to support the economy will be distributed to transport (5.1 billion soms), energy (4.3 billion soms), water supply to cities and villages (2.6 billion soms), health (2.2 billion soms), development of irrigation (871 million soms), agriculture (787 million soms), and the rest of the economy (100.2 billion soms).

At least 700 million soms out of the 14 billion soms of the anti-crisis fund will be directed to each region of Kyrgyzstan for concessional lending. The share of Bishkek and Osh should not exceed 40%, and each region must get at least 5% of the total anti-crisis fund. Businesses worst hit by the lockdown and those businesses that can give a rapid effect on economic growth will get preferential financing in the first place. Tourism and cargo transportation sectors have incurred big losses. Assistance to light industry and processing, as well as small and medium businesses can give a powerful momentum for economic growth. With the introduction of automated systems for transparent accounting and reporting of business activities, better conditions will be created for enterprises. A refinancing component will also be introduced to ease the credit burden for businesses.

The number of unemployed in Kyrgyzstan may increase by 500,000 people, which would result in an unemployment rate of 20%, according to the analytical report of the Eurasian Economic Commission. The income of the population is also at risk of declining, due to wage cuts or temporary loss of wages, the report noted.

In general, real wages in the EAEU countries are expected to drop by 10% (in Armenia, Kyrgyzstan, Kazakhstan, Russia). In Belarus, the reduction in real wages will be minimal (1-2%) because there was no nationwide lockdown there.

The consumer inflation rate in April 2020 was 5% compared to December 2019, according to the National Statistics Committee.  Since early 2020, prices and tariffs rose by 10.1% for food and non-alcoholic beverages, while prices for alcoholic beverages and tobacco products grew by 5.2% and services - by 0.1%. Prices for non-food products decreased by 0.2% since early 2020. In April 2020, compared to March, the consumer prices and tariffs increased by 2.2%.

• Civil protection
The Government introduced an emergency regime in the country from 22 March for one month. The emergency regime entails activation of special procedures for the actions of all state bodies involved in the introduction of an emergency regime.

Since 25 March the state of emergency was introduced in Bishkek, Osh and Jalal-Abad cities, in Nookat, Kara-Suy districts of Osh region, Suzak district of Jalal-Abad region. A state of emergency is introduced for the period from 08:00 on 25 March to 08:00 on 15 April 2020.

From 1 June, all kinds of economic and social activities have resumed, with strict observance of sanitary and epidemiological norms. Some restrictions will still be in effect after 1 June, such as holding mass cultural, sports, scientific, family and memorable events; activities of entertainment providers; work of children's entertainment providers and playgrounds; Internet clubs and computer game clubs, and activities of organizations in the sphere of preschool education
The joint order of the Ministry of Health and the Ministry of Education No. 379/ 426.1 of 4 June 2020 was released on the resumption of work of preschool education institutions in the Kyrgyz Republic. The order outlines the algorithm for preschool institutions on compliance with the interim sanitary and epidemiological regulations to prevent spread of COVID-19.

Some quarantine restrictions are loosened in Bishkek since August 20, the mayor's press office reported. Public transport will work again on week-ends and public holidays. The work hours will remain unchanged however - from 7.00 a.m. to 11.00 a.m. and from 2.00 p.m. to 11.00 p.m. The sanitary break from 11.00 a.m. to 2.00 p.m. should be used for cleaning, washing and disinfection of public transport.  Cafes and restaurants, and other public catering facilities are allowed to work from 7.00 a.m. until midnight in strict compliance with sanitary norms. Earlier, they were allowed to serve clients before 8.00 p.m.  Work hours of shopping centers, supermarkets, retail chains remain unchanged - from 7.00 a.m. until midnight. Parks, squares, and boulevards have reopened for the public. Rent of bicycles is permitted now. Work of night clubs, bars, karaoke clubs, movie theaters, Internet and computer clubs, children's indoor playgrounds and entertainment facilities is not allowed yet. These restrictions will remain in effect until further notice.