The business community of Kyrgyzstan appealed to the President and the Chairman of the Cabinet of Ministers. The document was signed by 25 business associations.
Entrepreneurs note that due to recent world events and a sharp appreciation of major currencies, enterprises in the country see prerequisites for deterioration of the economic situation of most of the business entities. They fear that such a significant depreciation of the national currency may have a sharply negative impact on the loan portfolio of financial institutions and the situation of borrowers.
Over the past 7 years, the exchange rate of som against the U.S. dollar has depreciated by 58 percent, over the past 5 years — by 40 percent.
At the same time, in recent years and at the moment, credit institutions are ready to borrow only in foreign currency when it comes to large business loans. A situation has arisen when companies in Kyrgyzstan are forced to pay up to 44 percent interest rate in soms on a loan taken in dollars over the past 5-7 years.
«Such interest rates are unaffordable for the vast majority of companies. This situation can lead to a significant deterioration of the loan portfolio of financial institutions, the situation of borrowers, a decrease in business activity in the country, mass layoffs and a decrease in budget revenues. In order to avoid this outcome, we propose to start an active use of SWAP instruments by the National Bank. This tool will allow the country’s credit institutions to receive som liquidity from the National Bank in exchange for backing in dollars. Accordingly, credit institutions will be able to issue loans to borrowers in the national currency. This will stabilize the activities of the country’s enterprises and reduce their dependence on sharp currency fluctuations,» the appeal says.
Entrepreneurs reminded that this practice had already been applied in 2016. Then foreign currency mortgage loans of the population were converted into soms with the help of the National Bank.
«It is also necessary to provide for the possibility of converting credit loans from the Russian-Kyrgyz Development Fund into national or Russian currencies. Many enterprises interact with this institution. It is worth considering further issuance of loans in the national currencies of Russia and Kyrgyzstan. We propose to provide for the possibility of restructuring loans for longer periods, providing tax breaks and other tools necessary to reduce the unbearable financial burden on local entrepreneurs and enterprises. We hope for a prompt consideration of the issue,» business representatives concluded.
