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Kyrgyzstan Approves Anti-crisis Plan
Source: trend.az
Source Date: Tuesday, August 17, 2010
Focus: Institution and HR Management
Country: Kyrgyzstan
Created: Aug 23, 2010

The new authorities have admitted that "the Kyrgyz Republic turned out to be in crisis, which affected all spheres of life", 24.kg news agency reported.

Political events broke out in April and June 2010 in the republic, caused profound economic disruption and social instability. This situation requires the implementation of high priority actions needed to address critical issues and tasks that will facilitate the exit of Kyrgyzstan on medium-term economic growth," the interim government officials explain.

The President of transition period Roza Otunbayeva entrusted personal liability on headers of ministerial offices and other government agencies "for quality and timely implementation of anti-crisis plan."

The authorities agreed that "the population of regions hit by ethnic clashes fall short of food, medicine and other essentials, and therefore require significant amounts of humanitarian aid".

Political instability has had its negative impact on the inflow of investment into the country. Experts register weakening of confidence of the private sector to the state, reduction of liquidity in the banking system. The state budget also experiences difficulties, which are associated with reduced revenue as a result of slow economic growth, reduction of foreign trade and with forced increase of unplanned expenses. Small and medium-sized business suffered serious losses because of the socio-political instability, especially in service sector, tourism, trade. The economy experienced negative effects caused by external demand. Closed state borders with neighboring countries, almost led to the cessation of exports of agricultural products, enterprises of light and processing industries was substantially damaged.

According to preliminary estimates of the Ministry of Economic Regulation of the Kyrgyz Republic, the GDP (gross domestic product) is expected to drop down by 5.4 per cent, despite the forecasted 5.5 percent growth at the beginning of the year, GDP per capita declined from $ 888 to $ 839.4 (that is 48.3 less).
General decline in production will be more than 5 per cent. The decline in the services sector will amount to 10.9 per cent, including the trade sector - 18.8 per cent, agriculture - 3.5. Inflation at the same time is expected to be 10.3 per cent.

The interim government suggested to implement highest priority measures at the first phase of anti-crisis program up to the end of 2010: to ensure stability of government balance, to support of social stability, to maintain energy, food and public safety.

"In order to maintain socio-economic stability and to implement the above mentioned tasks the priority areas of spending budget funds are:
1) solution of the internally displaced persons' problems, payment of compensation to the affected people;
2) provision of public obligations to the population (pensions, benefits, wages of public sector employees);
3) capital expenditure (rehabilitation and development of affected areas, housing construction sector and social infrastructure);
4) preparation for the heat deficit period;
5) support for agro-industrial complex (analysis of the needs of the regions and logistical resources (fuel, seeds, fertilizers), preparing for the autumn sowing);
6) issues related to the liberalization of foreign trade regime with major trading partners;
7) improving tax collection and ensuring revenue to the state budget, ensuring the sustainability of the state budget, the interim government suggested.
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