U bent hier

CORONA VIRUS - The situation in Kyrgyzstan

1. General situation

At a meeting of the Security Council on March 31, issues of strengthening measures to combat COVID-19 and ensuring food security of the country were considered. It was recommended that the government create additional places in the medical observatory located near the Manas International Airport and provide for new observational sites on the territory of one of the military units.

The Security Council also ordered to take the following actions:

  • transfer to a teleworking a significant part of employees of ministries and government agencies;
  • organize large-scale work on the disinfection of all public places, as well as facilities of institutions and organizations where cases of infection with coronavirus are recorded;
  • medical and social workers must conduct regular visits to older people at their place of residence to check their condition and provide assistance if necessary;
  • compile lists of especially needy citizens living in the settlements where the state of emergency is declared, and provide them with food and essential goods;
  • introduce a more effective algorithm, according to which all persons arriving in the Kyrgyz Republic undergo rapid testing for coronavirus infection;
  • ensure the targeted use of donor and humanitarian aid provided to control the spread of COVID-19;
  • study with the relevant services and companies the possibility of easing in the payment of utilities, television and the Internet;
  • the Ministry of Agriculture is recommended to ensure timely spring-field work;
  • the National Bank is recommended to work out with commercial banks the issue of ensuring a sufficient amount of cash in ATMs located in areas where a state of emergency has been introduced.

Given the extension of the state of emergency in some regions of the republic until May 11, 2020, as well as due to the temporary suspension of flights with foreign countries and the closure of borders of other states, people currently located in the territory of Kyrgyzstan in visa and visa-free regime, was able to leave the territory of the Kyrgyz Republic in the period up to June 1, 2020 without registration of exit visas and the requirement of registration at the place of residence.

At the same time, according to the State Registration Service of the Kyrgyz Republic, foreign citizens with expired registration will be able to extend it after the opening of the Population Service Centers and passport offices, tentatively on May 21.

In June Bishkek has eased quarantine measures of public transport, restaurants and cafes, grocery stores and markets, including trade centers. Masks, sanitizers and public distancing are required in public places.

Public transport

Buses, trolleybuses, minibuses operate in the capital every day from 7 am to 11 am and from 2 pm to 11 pm. Drivers are required to sanitize and disinfect the cabins, which must also have sanitizers installed. During the shift, the driver must wear a mask. For violation of epidemiological standards, a fine is provided. Break for sanitizing buses, trolleybuses and minibuses - from 11 am to 2 pm.

Public catering

Cafes and restaurants, other catering outlets are open from 7 am to midnight. Delivery services of all catering points are allowed to work around the clock. But in compliance with sanitary standards. Shopping centers with an area of ​​over 100 square meters, including supermarkets, grocery stores and small wholesalers, are open daily from 7am to midnight.

Markets

Markets and bazaars of Bishkek are open from 9 am to 5 pm with a mandatory closing for a break for disinfecting the territory and counters.

Bishkek remains the epicenter of both COVID-19 and pneumonia. As of October-November the epidemiological situation in the capital is aggravated. Acting Mayor of Bishkek, Balbak Tulobaev, plans to close all banquet halls in the capital for 15 days due to coronavirus worsening situation.

From May 1, despite the ongoing state of emergency, economic activity was allowed in the following areas: industry and production, construction, vehicle repair and maintenance services, private and public notary services, online stores, wholesale and supply of building materials (except for wholesale and supply of fabrics), automobile spare part stores, hairdressing and salon services, transport services organized by taxis (no more than 2 people are allowed).

From May 11, still during the state of emergency, economic activity was allowed in the following areas: microfinance organizations, insurance companies, real estate agencies, travel agencies, plumbing, electrical and carpentry, repair of household appliances, machinery, equipment, dry cleaning and cleaning services, building materials shops and markets, auto part markets, fabrics market, accessories for the clothing and leather industries, public transport, namely, passenger transport by bus and trolleybus except for minibuses.

2. Preventive measures

Since March 20 international flights to/ from Kyrgyzstan have been temporarily cancelled, except the following freight and passenger flights:

  • Moscow – Bishkek /once a week
  • Moscow - Osh/once a week
  • Novosibirsk - Bishkek /once a week

On March 22, the Kyrgyz government amended its previous decision to bar foreign citizens from entering Kyrgyzstan. According to the new provisions of the decree, foreigners with a residence permit in Kyrgyzstan as well as foreign nationals who are members of families of Kyrgyz citizens are not allowed to come to the country as well. The decision was made in order to limit arrivals of foreigners to Kyrgyzstan and prevent the import of the corona virus.

Since March 25 all domestic flights have been temporarily suspended.

On March 25 the Kyrgyz government decided to temporarily close the borders with Kazakhstan, Uzbekistan and Tajikistan as a precautionary measure against the spread of the corona virus. At the same time, Kyrgyz citizens will be allowed to return home from those countries, while Kazakh, Uzbek and Tajik nationals will be able to leave Kyrgyzstan.

The state of emergency has been declared from March 25 to April 15 in the cities of Bishkek, Osh, Jalalabad and districts Nookat, Kara-Suu and Suzak in south of Kyrgyzstan, to contain the further spread of the corona virus. Citizens residing in these areas are strictly forbidden to be outside during curfew hours - from 20:00 to 7:00.

In the daytime leaving the house is only allowed for buying food, medication or visiting a medical facility. It is necessary to have a passport on hand and an itinerary list.

It should be especially noted that entering territories where the state of emergency has been declared is prohibited, with the exception of citizens possessing a local residence permit.

All state employees and government servants in state institutions across Kyrgyzstan are to work remotely from home. Emergency services on the frontline in the corona fight are exempted from this measure.

Deputy Interior Minister Almazbek Orozaliyev said 48 checkpoints have been erected at entrance points into the capital, Bishkek.

The Education Ministry said on March 31 that it will begin broadcasting classes for schoolchildren on local television stations from April 8.

The city hall in Osh, Kyrgyzstan’s second-largest city, is offering psychological counselling by phone in three languages – Kyrgyz, Uzbek and Russian – for people suffering from anxiety as a result of the unfolding corona virus crisis.

Graduating student exams have been moved from May to late June. For written exams will be placed at appropriate distances and testing halls will be disinfected. 

Since September 21, regular flights on seven routes have been resumed from Manas Airport in Kyrgyzstan. Before departure, it is obliged to have the results of a PCR test to fly in the following directions: Istanbul, Antalya, Dubai, Sharjah, Tashkent, Almaty, Moscow.

Charter flights from Osh airport are operated along the following routes: Moscow, St. Petersburg, Novosibirsk, Yekaterinburg, Surgut, Krasnoyarsk. Entrance to the terminals of the airports of Manas International Airport JSC is allowed only for passengers with a ticket. At the entrance to the terminal building, passengers pass through a disinfection tunnel. Passengers must also strictly adhere to mask and social distancing requirement. For this, airport buildings have special markings and information stands. According to the current procedure in Russia, Kazakhstan, Uzbekistan, the United Arab Emirates, citizens of Kyrgyzstan must have a negative PCR test for coronavirus taken not earlier than three days before arrival in these countries.

3. Exit strategy

At this moment no information about a possible exit strategy is available.

4. Economy

a. Economic impact

COVID-19 has had an immediate and severe impact on the economy, with GDP falling by 5.9% year-on-year in January-July, the sharpest downturn in Central Asia over that period. Despite a loosening of restrictions, economic activity remains suppressed, with workplace activity 30% lower than the beginning of the year and retail activity 20% lower. A lower trade deficit masks the deteriorating picture of Kyrgyzstan’s external position. Except for a slight increase in gold exports, trade has been significantly reduced, with external trade falling by 22% in the first half, with a 33% drop in exports to China. Kyrgyzstan’s tourism sector nearly vanished amidst the pandemic (decline by 90%). At the same time, imports fell by over 50% the first seven months relative to the same period in 2019, to just USD 825m. Domestic revenue collection and customs revenues have fallen sharply due to reduced trade and suppressed commodity prices, lower domestic consumption and the impact of mobility restrictions imposed to limit the spread of the virus. By mid-May, the Ministry of Finance anticipated a 20% revenue shortfall for the year, with increased spending on health and social assistance pushing the fiscal deficit to 7.4% of GDP in the first half of 2020, up from 0.3%. Though the drop in remittances has not been as dramatic as initially feared, inflows are down 13% year-on-year, which will have hit household finances and increase the risk of poverty for many. Returning labor migrants and domestic contraction have led to an increase in unemployment, with worst-case scenarios estimating a surge of up to 21%. The World Bank expects the poverty rate to increase by 5.8 percentage points in 2020. The country’s path to recovery also depends on political stability. Street protests in early October resulted in the annulling of the 4 October parliamentary elections, a change of government and the resignation of the president. The prospect of fresh parliamentary and presidential elections has heightened uncertainty.

The economic situation in Kyrgyzstan, a poor country with no financial reserves and no easy access to international capital markets, is difficult. The national currency is supported by exports of raw materials, gold and the income of migrants working abroad (73% lost their jobs following the pandemic). Quarantine left hundreds of thousands of labor migrants without income, for whom work in Russia is the only way to feed their families in their homeland. Many have begun to return home, where the chances of a decent job are even lower. GDP is expected to drop 4% by the end of 2020 (excluding Kumtor enterprise - the largest gold ore deposit in Kyrgyzstan. Canadian development company accused of corruption and environmental violations, many demanded the nationalization of Kumtor). In 2021, real GDP growth is expected to be around 5.5-6% (without taking into account Kumtor enterprises), GDP growth is expected at the level of 6% the National Bank forecasted.

The Tourism and Culture Ministry on April 2 forecasted an 80 percent drop-in tourism industry activity in 2020. The National Statistics Committee estimates that tourism in 2019 contributed 30 billion som ($430 million at December 2019 rates) to the economy. Equivalent to 5.3 percent of gross domestic product.

According to the results of nine months of 2020, the economic decline was, according to various expert estimates, about 6%, migrant remittances fell by about 8%, the US dollar rate jumped to 83 soms.

b. Trade barriers

On March 2, Kyrgyzstan introduced an export ban on medicines and medical equipment.

On March 23 Kyrgyzstan imposed temporary ban on export of some food products and essential goods. According to the Cabinet of Ministers, the list includes wheat, flour, vegetable oil, sugar, chicken eggs, rice, pasta, disinfectants and bactericides, napkins, as well as mixed fodder and bran.

Eurasian Economic Commission Board has made a decision to impose a temporary ban on exporting personal protective equipment, disinfectants, medical products from the customs territory of the Eurasian Economic Union amid the spread of COVID-19.

The list of goods prohibited for export from the customs territory of the EAEU includes cotton wool, gauze, bandages, medical masks, half masks, respirator masks, personal protective equipment, equipment for respiratory organs, goggles, disinfectants, shoe covers, certain types of clothing and accessories for clothes, gloves.  The order is valid until September 30, 2020.

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

After the adoption of the Act on New Economic Freedom in April, including measures to enhance the business environment, the government put in place an Anti-Crisis Fund amounting to 2% of GDP in 2020 and 7% of GDP in 2021. It offers fiscal stimuli for export-oriented SMEs, on top of temporary taxation and debt-service relief measures for all firms. Poor and vulnerable groups in society heavily depend on their monthly payment from the Social Fund. To counter the surge in prices, which particularly affected vulnerable households, the government is aiming to regulate coal prices. The National Bank has remained responsive throughout the crisis, and is now cushioning the financial system’s adjustment, by selling forex reserves and purchasing locally produced gold. The government is also mobilizing foreign aid to support the country’s declining fiscal situation and to restructure debt repayments. The World Bank for instance is providing emergency financing for up to 65 000 MSMEs. Other development partners have offered their support, but the irregular transfer of power in October has also had an impact on donor relations, adding to the economic pressure and the uncertainty surrounding debt relief and budget support.

d. Economic outlook

With domestic demand remaining subdued and tourism activities not materializing in the third quarter of 2020, EBRD expect a GDP contraction of 9.5% in 2020. In 2021, the economy is forecast to grow by 3.0% with domestic demand picking up and international trade, transport and tourism linkages being partially revitalized. This forecast is subject to very significant downside risks stemming from the political turmoil in the wake of the October 2020 elections.

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.

20 november 2020