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CORONA VIRUS - The situation in Kyrgyzstan

1. General situation

As of February 9th, 2022, the total number of coronavirus infected people in Kyrgyzstan reached 199,714, among them 191,679 recovered, 2,913 people died.

As of February 9th, 2022, the total number of people vaccinated is 1,361,778 including those, who got both shots 1,109,800.

The Kyrgyzstan national vaccination program started in March 2021 and is using Sinopharm, Sinovac, Sputnik V, AstraZeneca, Pfizer and Moderna vaccines.

Masks are required in public places, enclosed spaces and on public transport.

Stores, restaurants are open with adapted safety measures such as the use of hand sanitizers, face masks and social distancing.

Due to the new strain, the government of Kyrgyzstan introduced a requirement on December 1, 2021, that all those entering the country are required to provide a negative PCR test result. This requirement applies to both foreigners and citizens of the Kyrgyz Republic, despite receiving the vaccine.

2. Preventive measures

On 28 October 2021, the Asian Development Bank (ADB) has approved a $25 million project to help the Government of the Kyrgyz Republic procure and deploy coronavirus disease (COVID-19) vaccines and strengthen the country’s capacity to implement its vaccination program.

ADB’s assistance, comprising a $12.5 million loan and a $12.5 million grant, will support the Kyrgyz Republic’s National Vaccination Deployment Plan by purchasing and delivering an estimated 1.7 million doses of COVID-19 vaccines, as well as syringes and safety boxes. It is financed through ADB’s $9 billion Asia Pacific Vaccine Access Facility launched in December 2020 to offer rapid and equitable vaccine-related support to ADB developing member countries.

ADB’s COVID-19 Vaccine Support Project will help vaccinate over 760,000 people, or about 12% of the Kyrgyz Republic’s population. The project builds on earlier support for the Kyrgyz Republic’s COVID-19 response. In 2020, ADB provided $50 million in loans and grants financing to support the government’s health, social protection, and economic response measures, and $20 million to help strengthen its healthcare sector. ADB also provided about $1 million for the immediate procurement of medical supplies and personal protective equipment for health workers.

3. Exit strategy

In 2021, the IMF advised the Kyrgyz authorities on policies during the COVID-19 crisis, the exit strategy to achieve and maintain macroeconomic stability after the crisis, and how to strengthen resilience over the medium term. The IMF have continued to help the Kyrgyz Republic with capacity building as well as, focusing on public finance management, monetary policy, banking supervision, and government finance statistics.

4. Economy

a. Economic impact

The Kyrgyz Republic has been significantly affected by the COVID-19 pandemic and was one of the hardest-hit countries in the region. The human cost of the lives lost is immeasurable, but the shock to the economy has also been substantial. The pandemic led to the contraction of output by 8.6 percent in 2020, a substantial loss of jobs, and an increase in poverty.

The labour-intensive sectors of the economy were affected the most. Tourism fell by nearly 80 percent. Transportation, trade, and construction were also significantly impacted.

Inflation increased from 3 percent in 2019 to about 10 percent in 2020, primarily due to the depreciation of the currency and higher imported food prices. Public debt increased by 16 percentage points to 68 percent of the GDP in 2020, reflecting lower output, a higher fiscal deficit, and currency depreciation. According to World Bank estimates, poverty increased from 20 percent to 31 percent as incomes declined and unemployment rose.

At end of 2021, the economy has been recovering from the lows of the 2020 recession and real GDP posted a small growth of 0.1 percent year-on-year in the first three-quarters of 2021. Recovery is constrained by a major contraction of gold exports (down 2.9 times year-on-year in January-August 2021, and that is despite Jerooy, the country’s second-largest gold mining project, moving to production in March 2021).

On top of that, on 17 September 2021, the London Bullion Market Association (LBMA) temporarily suspended Kyrgyzaltyn, the country’s state-owned gold producer, from its list of acceptable refiners. LBMA’s decision may also restrict Kyrgyzaltyn’s access to other gold hubs, including Switzerland and New York.

On the positive side, GDP excluding Kumtor Gold Company grew by 3.6 percent year-on-year in the first three-quarters of 2021, driven by growth in retail trade, transport and communication. Agriculture was down by 5 percent year-on-year in the same period, due to drought. Services expanded by 5.7 percent year-on-year, enabled by the increased inflow of remittances (up 21 percent year-on-year in US dollar terms in the first eight months of 2021) and the easing of lockdown measures.

Real gross domestic product (GDP) expanded by 0.1 percent year-on-year in the first three-quarters of 2021. However, gold production and exports declined significantly. Remittances are surging, supporting domestic demand. Services are recovering, while labour-intensive agriculture contracted in January-September 2021 due to drought.

b. Trade barriers

An export ban on some food, medical and pharmaceutical products was introduced in November 2020.

The ban on food exports was extended in June 2021 for another six months. The list of restricted items include wheat, wheat flour, sugar, rice, vegetable oil and chicken eggs. In addition, imports of granulated sugar and refined vegetable oil were exempt from value added tax (VAT) until the end of August 2021 for private-sector companies, and until the end of December 2021 for the State Material Reserves Fund.

Enterprises processing certain domestic agricultural inputs (such as flour from cereals, vegetables and nuts) only need to pay 20 percent VAT.

Medicines and pharmaceutical products are also subject to a temporary export ban to ensure adequate domestic supply.

Botst u buiten de EU op handelsbelemmeringen of andere problemen op het vlak van markttoegang? Laat het ons weten via handelsbelemmering@fitagency.be. Wij analyseren uw aangifte en maken die via de geijkte kanalen over aan de bevoegde instanties.

c. Measures for economic relaunch

The authorities responded swiftly with a range of measures to protect public health and mitigate the economic impact of the pandemic. These included emergency health spending, stepping up the food security program for the vulnerable, temporary tax deferrals and subsidized loans for small and medium enterprises, and liquidity support to banks. Without these measures, the economic downturn and its impact on poverty would have been much worse.

Additional measures to support economic recovery were adopted in February 2021. They are outlined in the Plan of Priority Measures to ensure social stability and economic sustainability.

First, the plan seeks to improve the quality and increase the number of electronic government services available to the public.

Second, to aid businesses, the government will simplify administrative procedures and invest in the automation of customs and tax processes.

Third, to ensure the healthcare system is resilient to future waves of the Covid-19 pandemic, the government will intensify the vaccination campaign and introduce preventive measures in schools to curb the spread of the coronavirus.

d. Economic outlook

Real GDP growth is projected to accelerate to 5.0 percent in 2022. Significant downside risks are associated with the Covid-19 pandemic continuing to weigh on the heathcare sector in 2022 and the Kyrgyz Republic’s future ability to access global gold markets.

5. Useful links

6. Dossier Coronavirus

Het coronavirus heeft een wereldwijde impact, niet alleen op de gezondheid maar ook op de economie. Ook uw export kan hiervan gevolgen of zelfs hinder ondervinden.

FIT monitort de risico's dagelijks en ons buitenlands netwerk informeert u over alle implicaties voor Vlaamse exporteurs op hun internationale activiteiten.

In het dossier Coronavirus vindt u een aantal nuttige tips, adviezen en inzichten in de economische impact van de verspreiding van het virus op internationaal ondernemen.

Met vragen over internationaal ondernemen in tijden van Corona, kan u terecht bij exportadvies-corona@fitagency.be.

11 februari 2022