 Financial
and Banking Sector. |
Kyrgyzstan, being historically connected to Russia
for such a long time is a clear reflection of pretty
much all the processes, which have taken place during
the transition to the market economy which started
in 1991. Although gaining independence and unsuccessful
attempts to cover and protect itself by the Russian
economy did not bring economic stability. In the
year 1993, Kyrgyzstan was the first CIS country
to implement currency reform and it was also in
1993, introducing its own national currency- the
som.
Today there are 22 commercial banks, and only 2
are governmentally controlled. The Russian crisis
of 1999 brought about 7 banks under the control
of the NBKR, later three of those were liquidated,
and a few others recovered. An international tender
was opened for the privatization of the Savings
Bank in 2000, but this has now been postponed by
the parliament, due to the various political issues
it has brought about. At the end of 2002 time there
were three foreign banks in Kyrgyzstan: KyrgyzDemirBank
(owned by Demir Bank of Turkey), the National Bank
of Pakistan and Bank of Asia (South Korea), the
total of commercial bank branches on Kyrgyzstan
is 155, 48 of which are under supervision of Settlement
and Savings company.
Banking system in Kyrgyzstan, meets all international
standards, presenting NBKR, as the leading, although
not so independent, policy maker and regulator of
the banking sector. Kyrgyzstan has two-level banking
systems. The first level presented by the National
Bank of the Kyrgyz Republic, the second sector falls
into the category of commercial banks. In the year
2002 there were 20 banks, as well as other monetary
organizations, licensed by NBKR. The main policies
in monetary and crediting system follow the main
priorities of the development process - stabilization
and enforcement policies on reformation and requirement
set up by NBKR. Banking system reliability is being
improved by the increase of the commercial bank's
capital. In July 2001 the minimum capital had to
comprise 50 million soms, however later on in order
of the improvement of bank's sustainability National
Bank laid down its demand to increase capitalization
up to 100 million soms. Interesting enough, almost
all of the banks meet those requirements. According
to National bank, total capital of commercial banks
and Settlements and Savings Company increased to
96 million soms in the beginning of 2001, a year
later the capital comprised 1.757.686 million soms.
Bank's net profit in 2001 made 45.7 million soms.
The main priority of the NBKR policies are given
to the restraint of inflation as the main condition
for the stable growth of economy, mobilization of
internal financial resources and increase of the
investment flow into the country.
There is an existing body of Ministry of Finance,
which is regulating all macroeconomic processes
and developing a structural system of attracting
foreign investments. This particular ministry, being
earlier just transformed from the Soviet Saving
Bank, at present time has to take on tasks that
are not primary to their functions, however already
fruitful. The so-called crisis of 1999, showed instability
and incapacity of several banks to fulfill the capital
requirement, thus 8 of which were closed. However
the ministry does not see this as the main problem,
the problem is in the system itself and it has to
be changed. Main priority now days are stability
of the national currency and increase of the involvement
of the ordinary citizen in banking system. |
As the trust to bank
in whole and especially after 1999 crushed, Ministry
of Finance right now is working on the program "I
love MY bank" together with NBKR, in order
to attract population, sustain present development
conditions and also create soft and attractive policies
for the investors. National Bank and Ministry of
Finance working closely together on the issue of
foreign investors.
"First of all we are together with the government
responsible for macroeconomic stability. Secondly
thing that we are doing is we are giving full picture
to all investors. Sometimes we are favoring some
positive things. But we never do misleading. We
have a problem we are showing how we are going to
solve this problem. We are talking openly, explaining
where are positive things and it seems investor
should understand the opportunity that if they have
a stable situation, no problem and quiet."
Ulan Sarbanov
Chairman of the National Bank of Kyrgyzstan.
Although the situation on Kyrgyzstan seems stable
after all, there are still numerous problems remaining
in the development of the sector. Now days the main
problem in the country on the financial side seems
to be a question of taxation "We have accepted
the new concept of tax policy improvement. The main
goal is not to increase the tariffs and rates of
all the taxes. We are planning to decrease these
taxes level, but at the same time we will increase
thus the number of taxpayers. I will tell you concretely
what we have done. We have decreased the tax for
profits from 30 % to 20 %. We have also decreased
the income tax by creating 2 percentage rates of
10% and 20 %. Before it was 5 to 30 % depending
on the sum. We also have the protective system of
taxation." Mr.
Abildaev Bolot Minister of Finance of Kyrgyz Republic
Although, one can see that there is a specific and
stable growth and change in the system "The
banking system is shrinking and banking assets are
only 4% of GDP. Banks sizes have been reduced, but
the capital is increasing substantially and as a
result the banking system is becoming profitable
again. Three years ago the total loss of banking
system was around 360 million soms. Last year the
banking system was totally profitable for the first
year in a long time. During the first half of this
year almost 90% of the local banks forecast that
the half-year was very profitable. This is the reason
I am saying there is improvement, but I am not praising
the current state of the banking system because
our society is not happy still. Kyrgyz society is
not happy because from one side people want to get
more credit, which is understandable, but it is
likely to be difficult. The banking system is still
not consolidated and it is not strong enough to
help in some area maybe lift economic rules."
Ulan Sarbanov
Chairman of the National Bank of National Bank
Commercials banks, however having to operate under
very strict conditions are faced developing and
the main prospective and priorities of those are
to become stable and known, exactly for the reputation
of trustworthiness and support of the population.
"The big problem we have, like all other post
soviet republics, is the importance of the officials.
All the good starts and initiatives meet an obstacle
in the face of the officials, which in their self
interest or because some other reason, do not think
about the interest of the country. Due to that reason
our president organized the agency of attracting
the foreign investors into the country. Joomart
Otorbaev, the ex-prime minister of the country,
is working in this committee and he does everything
possible to attract foreigners to work here. Here
are a lot of opportunities to finance and receive
visible outcome." Mr.
Murat Kunakunov Chairman Ineksimbank (Eridan)
Thus conclusion leads to the outline of future progress
and innovations, stability and sustainable development
provide the basic core in the improvement of financial
and baking sectors of Kyrgyz Republic.
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