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Source: www.asiaecon.org |

KYRGYZSTAN'S MINISTER OF ECONOMIC DEVELOPMENT AND TRADE'S ADDRESS TO NATIONAL COUNCIL


Kyrgyzstan's Minister of Economic Development and Trade, Akylbek Japarov, has suggested that the nation should use past experiences of the Soviet “pyatiletkas”, or five-year plan, to rehabilitate the struggling economy. The Minister believes that if Kyrgyzstan is able to draw positives from the “pyatiletkas” like Japan, China and other countries did after the Second World War, the economy can be successfully rebuilt.


Kyrgyzstan’s Minister of Economic Development and Trade, Akylbek Japarov, has suggested that the nation should use past experiences of the Soviet “pyatiletkas”, or five-year plan, to rehabilitate the struggling economy. The Minister believes that if Kyrgyzstan is able to draw positives from the “pyatiletkas” like Japan, China and other countries did after the Second World War, the economy can be successfully rebuilt.

During the meeting of the National Council, members discussed the progress of the country’s strategic development. In particular, Japarov outlined the most significant advances made in Kyrgyzstan in 2008. One of the topics that was discussed is the country’s reestablishment of social and political stability. Despite the global financial crisis,   Kyrgyzstan has been able to maintain its macroeconomic stability. Earlier in the fiscal year, the level of inflation was 15 percent with the potential to reach 30 percent. However, due to measures adopted by the Kyrgyz government, inflation was kept at 20 percent, which is better than expected. The country has also combated the instability and risk of food and energy security. The Minister credited the success of the stabilization in food and energy security to external debt management. At one point, the external debt to GDP ratio was considered to be in the critical zone, but over the course of the year the proportion has been lowered to the safe level of 46 percent.

Minister Japarov also announced that there has been a noticeable increase in the inflow of direct investments, which accounted for $580 million in 2008. This figure is a significant increase, 2.8 times more than in 2005. Japarov accredits this marked increase to the improvement of the investment climate and a weakening of regulatory impacts on business entities. In fact, over the last year the number of inspections of business entities had fallen 28 percent. At the present moment, efforts are being made to reduce the licensing procedure allowing for smaller business entities to also enter into the market.

The meeting also established the continued efforts to transform the mostly agro-industrial economy to an agro-service economy. Presently, agriculture and services contribute 70 percent to the country’s GDP. Domestic trade accounts for 40 percent of all services and is developing rapidly. Not only is the domestic trade contributing to the rapid development of the service sector but traditional industries, such as trade, as well as new services in the technologies, communication and financial mediation sectors are also contributing to the quick expansion.


Despite all the successes earlier in the year, the second half of 2008 has not produced the same results. This, according to the Minister, makes it difficult to strategically plan for Kyrgyzstan economic development for the next three years. However, the strategy for the next three years does include anti-crisis measures. Some of the tools that will be implemented to try and improve the economy include stable and predictable legislation, re-bureaucratization of the tax system, flexible administration, and non-interference in business.

Minister Japarov also mentioned that the establishment of different funds for refinancing, development, innovation and entrepreneurship development would also enhance the effectiveness of regulatory policies. The establishment of such financial tools would allow for a more favorable development of small and medium-sized businesses, which would help maintain a sustainable economic growth. Steps to improve small and medium-sized businesses need to be taken because the shares of this sector has only increased from 43 to 47 percent from 2005 till 2008. To spur growth in this particular sector, the Minister has offered to remove administrative barriers, to try to reduce the turnover in business, and to ensure the greatest possible transparency in legislation.

Despite all the positive measures set forth to address the issues that are required for sustainable growth, the Minister pointed out the continuous energy problem. In order to solve the difficult situation in the energy sector, the construction of Kambarata hydro-electric power station will be put as a priority from 2009 till 2011. The fact that Kyrgyz’s government has committed to constructing Kambarata-2 without assistance helped secure loans for the construction of Kambarata-1 from the Russians.

The overall strategic objective in the next three years is to improve the livelihood of the people in Kyrgyzstan. This includes increasing life expectancy of the Kyrgyz population and increasing pensions and salaries. Efforts will also be made to reduce the unemployment rate. 

Source: www.AsiaEcon.org
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Source: www.asiaecon.org |


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