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GDP.kg. Problems with growth?

24/05/14 08:24, Bishkek – 24.kg news agency, by Darya SYTENKOVA, Darya PODOLSKAYA

Government officials say that in 2014 GDP growth will certainly constitute 7 percent. Consequently, the same rate will be laid in the growth of the economy. Inflation is expected to reach 6 percent. The laid budget deficit - 9 billion soms. However, representatives of foreign financial missions, in particular the International Monetary Fund (IMF), lead the other data and predict the contrary, reduction of economic growth and urge the Cabinet to cut spendings. 24.kg news agency addressed to their respondents with the following questions: what can be associated with the reduction in GDP growth and which sectors should expect losses?

Temir Sariev, the Minister of Economy:

-GDP growth at 4.4 percent level - the IMF forecasts. Last year, the organization also gave less than we had planned, and it is normal practice introducing adjustments. All countries agree on the data on the development of the economic situation. But I think this year we will achieve stated targets on GDP. We plan that Bozumchak and Altynken field will operate, the first phase of the construction of an alternative north - south route will be completed.

-But now GDP is mainly generated at the expense of Kumtor. What will be the situation after restructuring of the agreement with Canadian investor?

-Kumtor still works. However, there are certainly some problems. The issue of shareholders hasn't adjusted completely. Also it is predicted a slowdown in growth rates due to problems with the re-export of goods and their subsequent sale in Dordoi and Kara-Suu markets. But in principle, I think, it is real to reach 7 percent of GDP in 2014.

Christian Beddies, the Head of IMF mission:

- IMF predicts slowdown of Kyrgyz economy rates up to 4.4 percent. Decrease is expected due to a slowdown in economic growth in the region. According to forecasts, inflation will rise as a result of devaluation pressure in early 2014, but it should not exceed the level of single digits. In the medium term, as expected, economic growth will slightly increase and to constitute about 5 percent. At the same time, inflation, according to estimates, will stabilize at 6 percent.

We suggest the Government of Kyrgyzstan to seek additional sources of revenues and reduce costs, as there are difficulties in obtaining funds in connection with the closing of Transit Center. But in general, losses of income are manageable.

Kurmanbek Dyikanbaev, the Deputy Chairman of the Parliamentary Committee on Budget and Finance:

- According to the estimates, we had to reach the level of 6.9 percent of GDP growth in 2014. However, it is likely to be a decrease because GDP is connected with external factors, and the country is very sensitive to them. Imports from Ukraine decreased. In addition, Russia planned to invest in Kurpsai HPP about a billion, and the money may not come in a timely manner, that also reduces the impact of GDP growth. If we enter the Customs Union, for the first time it can also give a decline in production.

In agriculture, on all counts there is observed a growth in I quarter up to fishing. According to the National Statistics Committee and the Government, all figures are forecasted with overfulfillment.

The situation with the production is not so rosy. Developers of Taldy-Bulak Levoberezhny deposit, after receiving a license, promised to give the first production in March 2014, then delayed the launch in June, now say that the first kilogram of gold will be given only in September. But the main risks, of course, are connected with Kumtor. The Government should have to submit the draft agreement till May 12. These agreements are suspended, deadlines have passed. I think that next month we will have a lot of talks on Kumtor.

Nasirdin Shamshiev, the Head of Macroeconomic Policy Department of the Ministry of Economy of the Kyrgyz Republic:

- We have more optimistic prognosis than giving by the IMF. On average, the annual volume should be no less than 7 percent in line with the strategy of sustainable development. This year we should reach the level of 6.3 percent. We are preparing the materials for the Coordinating Council on Macroeconomic Policy; we need to use all the reserves in order to achieve these indicators. However, we have a pessimistic forecast growth - 4.8 percent.

Risks - primarily Kumtor, because this issue is not completely resolved. Secondly - the lack of water, there is a risk that it may not be enough electricity for production. The third risk - the situation concerning Ukraine. Sanctions against Russia will indirectly affect our economy.

There are, of course, home-policy and internal economic risks. The production at the glass plant in Tokmak is reduced, there are difficulties on export. There is a problem with Dzhunda oil refinery plant, the plant had to go into operation and is now working, but the issue of supply of raw materials is not fully resolved.

Zhumakadyr Akeneev, the expert on the economy issues:

-In principle 7 percent - the real figure. But generally speaking, there is nothing that would prevent the Government to reach a specified target. Loss, of course, occur due to withdrawal of Manas Transit Center from the territory of the republic and reduction of services due to disruptions in three major markets - Kara -Suu, Dordoi, Madina, due to existing re-export. On average, they give 12 percent of GDP. Because of current stagnation in their work, there is a decline in services sector, by 30-40 percent. For other sectors there should not be any losses. This year Bozumchak, Altynken and Ishtamberdy deposits should start operating.

Sergey Ponomarev, the Head of the Association of Markets:

-I think that the IMF forecasts are more real than estimates of the government. Now there is a downturn in trade and services. Dordoi market, which gave 5 billion soms annually, now faces serious difficulties due to suspension of goods reexport. Plus, decline in the service sector can be observed now. We should understand that small business takes a major percentage of economically registry, because there is no large-scale production. As for Kumtor, which gives 4 percent, if it doesn't stop production this year due to problems with local residents and politicians with their delusions and requirements, we can hope that it will give the percentage of the deposit. And so all the current barriers created with the countries-members of the Customs Union, and business abhors barriers.

Damira Dootalieva, the Chairwoman of the Central Committee of the Trade Union Federation:

-I do not believe that the Government can keep GDP growth at the level of 7 percent. It's just unreal. Losses occur in almost all sectors of the economy. We have already lost 2 billion soms from the beginning of the year, which were given by Dordoi market. Frankly speaking, I do not know on what money the Cabinet is going to pay wages and pensions.

Ermek Niyazov, the Commercial Director of Kyrgyztelecom:

-Of course, the data are interesting. But maybe that is a discrepancy due to differences in data rate of the dollar? I can not say whether the government will reach the level of GDP growth of 7 percent in 2014. However, telecommunications will give 20 percent. Definitely.

URL: http://eng.24.kg/economics/169569-news24.html
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Exchange rate from 4 February
National Bank of Kyrgyz Republic
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«When we ran in the elections, we said that would even get the moon and the sun from the sky ».
MP Kamchybek Joldoshbayev at a meeting of Parliament, February 2, 2017.

«What have you done besides sale of donkeys to China?».
Deputy Ryskeldi Mombekov to the head of State Inspectorate for Veterinary and Phytosanitary Safety Kalysbek Zhumakanov at a meeting of Parliament, February 1, 2017.

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