FOUNDATION AND DEVELOPMENT OF GUARANTEE FUNDS IN THE KYRGYZ REPUBLIC
Since 2011, the Kyrgyz Republic has started a new financial guarantee system – Guarantee Funds. At the initial stage, 4 pilot Regional Guarantee Funds were established in Kara-Balta city, Jalal-Abad city, Karakol city and Saray village of the Kara-Suu District of Osh Region. The founders are the mayor’s offices and Saray ayil okmotu (Saray Village Administration). Later, the Funds were established in Osh city and Kant city, which together made up 6 Guarantee Funds. At the same time, in 2013, the Law of the Kyrgyz Republic on “Guarantee Funds in the Kyrgyz Republic” was adopted, which provided the legal framework for Guarantee Funds of the Kyrgyz Republic and a guarantee system was formed at the legislative level. For more than 5 years of activity, Guarantee Funds, in cooperation with the banking system, supported more than 400 entrepreneurs, providing them with guarantees of KGS 35 million, banks issued loans in the amount more than KGS 170 million. Revenue of entrepreneurs, who received guarantees, totaled KGS 600 million. 332 new jobs were created; 887 already existing jobs were supported. The return of guarantees of Regional Guarantee Funds, as of December 31, 2015, was 100%, taxes in the amount more than KGS 5 million were collected for the local budget. The above-mentioned results of Regional Guarantee Funds allowed to support more SMEs by the establishment of OJSC “Guarantee Fund”.
The Government of the Kyrgyz Republic signed Order No. 288-r, of June 23, 2016, to open OJSC “Guarantee Fund” with the capital of KGS 72 million from the republican budget. With the financial support of Asian Development Bank (Program “Improving the Investment Climate – Subprogram 2”) additional capital in the amount of USD 3 million will be allocated. As a result, further, the capital of OJSC “Guarantee Fund” must be about KGS 280 million (equivalent of USD 4 million) until the end of 2016.