The Cabinet of Ministers of the Kyrgyz Republic has approved new rules regarding the operation of budget loans. The signing of the relevant decree was carried out by the Chairman of the Cabinet of Ministers, Adylbek Kasymaliev.
The main goal of this document is to provide state support through the mechanism of budget lending, which should contribute to sustainable economic growth, the development of various sectors of the economy, and the modernization of life-support infrastructure, communal systems, as well as strengthening the energy, economic, and food security of the country.
Content of the New Regulation
The new regulation establishes a unified procedure for the provision, administration, monitoring, and repayment of budget loans allocated from the republican budget and other sources, as well as for conducting leasing operations.
The main areas of budget lending include supporting economic growth, developing infrastructure and communal systems, as well as ensuring security at the national, economic, energy, and food levels.
The decision to issue budget loans is made by the Cabinet of Ministers. Loans can be provided both in cash and in the form of goods and material resources.
The key conditions for lending include targeted use of funds, returnability, urgency, cost, security, as well as confirmed solvency of the borrower, which implies the absence of tax and credit debt.
Interest Rates and Loan Terms
Interest rates depend on the category of the project:
- socially significant and infrastructure projects — from 1% to 3% per annum;
- infrastructure projects of state companies — 4–5%;
- commercial projects — from 6%;
- projects financed by foreign funds — according to the terms of international agreements.
- short-term — up to 1 year;
- medium-term — up to 3 years;
- long-term — over 3 years.
Control over the targeted use of budget funds can be carried out through a banking support mechanism with the opening of a separate account and the use of online reporting.
The administration of the provided loans is entrusted to credit agents, whose costs are covered by a portion of the interest income.
Special Conditions and Responsibility
Special conditions are provided for startups — with a mandatory own contribution of at least 30%, while the budget bears the risks. A special procedure is also provided for the Deposit Protection Agency in case of a shortage of funds in the Deposit Protection Fund.
Each year, monitoring of the state of budget loans, the financial condition of borrowers, and the fulfillment of obligations will be conducted.
Penalties are provided for delays in fulfilling obligations — the fine can reach double the interest rate. In case of force majeure circumstances, a temporary suspension of penalties may be possible.
Restructuring of budget loans is allowed, including changes in terms, interest rates, and payment schedules, and is carried out by decision of the Cabinet of Ministers with the approval of the Jogorku Kenesh.
A procedure for debt recovery has been established, which includes early recovery, judicial and extrajudicial procedures, bankruptcy, as well as the possibility of repaying the debt by transferring property.
Bad debts may be written off in accordance with the law in cases of liquidation or bankruptcy of the borrower, their death, and other grounds, exclusively by decision of the Cabinet of Ministers and the Jogorku Kenesh.
Strict requirements for transparency are also being introduced: information about budget lending projects must be available on official websites and in the media.
