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Government of Kyrgyzstan introduces new concept of budgetary policy

«Government introduces a new concept of budgetary policy, drawing lessons from the financial and economic problems of 2020,» acting Prime Minister of Kyrgyzstan, Artem Novikov, said during a meeting on budget execution, forecast for January 2021, as well as on the implementation of new approaches in budget policy.

According to him, a rather ambitious budget for 2021 was adopted at the end of last year. At the same time, 2020 showed the need for formation of appropriate reserves in order to avoid the risks of repetition of unforeseen situations. Therefore, the Cabinet of Ministers, together with the Ministry of Finance, predicted a monthly plan of revenues and expenditures of the republican budget to synchronize the volume of tax revenues with all the social obligations of the Government.

«The situation that developed last year prompted us to change the entire budget policy for the near future. All social obligations of the Cabinet — payment of pensions and benefits, debt repayment — will be tied exclusively to tax revenues. Our fiscal authorities, our economy must fully meet the needs of the population in social obligations. In addition, we must come to an understanding that the expenses of the next year and the following periods should not exceed the level of income of the previous ones. In such a way we will be able to form appropriate reserves for the revenue side of the budget and direct them to the development of the economy,» Artem Novikov believes.

He also told that the Ministry of Finance would create two funds, one of which is a reserve one. It will receive all unaccounted revenues in the approved draft budget. These funds will be spent on financing of either unforeseen situations and repayment of social obligations, or on economic development. These funds will not be spent in other cases.

«We will reorient our policy on obtaining external borrowings. All external loans related to credit funds will be directed exclusively to the development of the economy and provided on a repayable basis. Thus, it will not influence the risks of external debt repayment. These are the key points in the NPA package, which must be submitted to the Parliament by February this year,» Artem Novikov said.