Many SMEs suffer large losses due to the spread of coronavirus infection and can be significantly affected by the consequences of the pandemic. In this regard, in order to smooth out the negative consequences in the economy, and to resume social and economic activity in the country, the Government of the Kyrgyz Republic is developing a package of measures to support SMEs.
This was announced on April 27 by Vice Prime Minister E. Asrandiev, during an interview on anti-crisis measures and the economic situation in the country in the Mayek program on Ala-Too 24 channel.
One of these measures is the development of financial instruments, which include providing guarantees to creditor banks on loans granted to SMEs with insufficient collateral value. In this regard, “The Government plans in near future to increase the capital of Guarantee Fund by another 1 billion KGS”, Erkin Asrandiev said.
This is justified by the fact that OJSC “Guarantee Fund” satisfies the needs of entrepreneurs in additional collateral by issuing guarantees. The need for guarantees for SMEs is 40-50% of the loan portfolio of the banking system. Since the inception of operations and as of March 31, 2020 OJSC “Guarantee Fund” issued 2 150 guarantees in amount of 1.9 billion KGS, partner bank issued loans in amount of 6.7 billion KGS, the repayment of guarantees is 99.5%.
As part of the implementation of President S. Zheenbekov’s Decree on declaring 2020 – the Year of the development of regions, digitalization of the country, and support of children, 88% of guarantees of OJSC “Guarantee Fund” are sent to the regions. Due to the guarantee support of entrepreneurs, a total of 2561 new jobs were created in the republic.
E. Asrandiev also emphasized that increasing the capital of OJSC “Guarantee Fund” will provide a great opportunity for enterprises to obtain the financing they need through access to credit resources on more favorable terms. Indeed, many entrepreneurs who used guarantees in the past were able to make sure that the guarantees of OJSC “Guarantee Fund” benefit the entrepreneurs: loans are successfully disbursed, production is evolving, enterprises have development prospects.