The Kyrgyz economy is facing unprecedented challenges due to the COVID-19 crisis. Small and medium businesses suffered the most. In the absence of targeted interventions, this state of affairs will lead to a large-scale business closure, according to the Ministry of Finance.
In order to mitigate the impact of the crisis in the republic, an anti-crisis plan was approved, providing for liquidity support in the form of a preferential lending program of at least $175 million. It was supposed to be aimed at mitigating delays in loan repayments by banks.
The initial economic response plan included $15 million in support, including deferrals on several types of tax liabilities and price controls on basic products. However, as recognised in the relevant department, such measures are insufficient, since financial institutions will still bear the risks.
In this connection, work is currently being completed on a follow-up support plan, already for $400 million. The funds will be used to address the economic and social impact through food security, support banks to finance micro, small and medium-sized businesses, as well as other administrative measures.
The main private and financial sector emergency support project has three components:
Support for micro, small and medium businesses.
Introduction of a portfolio risk distribution mechanism.
Implementation, coordination and project management.
The first component provides for: providing reimbursable financial assistance to enterprises to overcome the crisis $72 million; financing of micro-entrepreneurs working on patents $30 million; support for legal entities and individuals who keep accounting records, pay taxes and hire employees $42 million.
$25.5 million will be allocated for the implementation of the second component. Another $2.5 million for the third. This amount will be added to the previously allocated $50 million to support MSMEs.
The donors of the project for emergency support of the private and financial sector in Kyrgyzstan are the Asian Development Bank and the International Development Association.
Reported by Akchabar.