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    New standard.

    An external audit of financial statements for 2018, conducted by LLC “Accounting Audit Innovation”, was completed in OJSC “Guarantee Fund”. Based on the audit results, a positive conclusion was obtained confirming that the financial statements of OJSC “GF” reliably reflect the financial position, financial results and cash flow for the year ended December 31, 2018, in accordance with International Financial Reporting Standards (IFRS).

    At the same time, we note that OJSC “Guarantee Fund”, through its own efforts, developed and implemented the principles of accounting and financial reporting in accordance with IFRS-9, which was noted in the conclusion of the audit company. This is a big step forward for the Fund as a financial institution in the application of modern financial instruments.

    The phased work on the implementation of IFRS 9 in Kyrgyzstan, as known, has been conducted in recent years with the consulting support of international audit organizations. In 2014, the IASB issued a final version of IFRS 9 “Financial Instruments”. In 2017, the National Bank of the Kyrgyz Republic issued recommendations on IFRS 9 for commercial banks. A new standard came into force on January 1, 2018.

    Considering that the transition to the new standard took time, the adjustment of the methodology, policies and procedures for classification, accounting for financial instruments and reserves assessment, personnel training, it should be noted the high professional level of specialists of OJSC “GF”.

    The Fund, in particular, defined methods for assessing credit and guarantee risks and probabilities of default in accordance with the principles of IFRS 9. To assess systemic and individual risks and probabilities of default, the Fund developed and applied a regression model that takes into account the influence of macroeconomic factors, also uses methods based on analysis of accounting and financial statements, and a systematic approach to determining credit and guarantee risks based on the experience of historical losses.

    Special attention is paid to the identification, measurement and evaluation of the guarantee risk as the main risk. OJSC “GF” optimizes procedures and improves approaches to considering projects of entrepreneurs for obtaining guarantees and preliminary risk assessment of projects. In order to minimize the risks, OJSC “GF” uses such methods as diversification, limitation, reservation. As part of measures to manage guarantee risk, reserves are created for potential losses on loans with guarantee provision in accordance with IFRS.


    New to the book market.

    At the beginning of 2019, a book of Malik Abakirov and Syrgak Abakirov “Access to Finance for SME: Guarantee Fund” was published. It is encyclopedic and is intended for a wide range of readers interested in the entrepreneurship development, guarantee funds, finance and economy of Kyrgyzstan as a whole.

    The book can also be used as a scientific and practical manual for financial and banking workers, entrepreneurs, students and university professors. The authors did a tremendous amount of research and analysis, provided the book with a broad conceptual apparatus, tables and diagrams and described international experience in the development of guarantee funds and their impact on the economy.

    In this book, relevant in content, informationally rich, statistically reliable, the role and importance of the guarantee system in the field of small and medium enterprises in Kyrgyzstan is described, including the history of establishment and development, stages of formation, and according to which, it is planned to establish SME Development Corporation and SME Development Bank.

    The value of this book is that it is based on the real and successful experience of the activities of OSJC “Guarantee Fund”, the forecasts and prospects are based on a firm foundation of achievements of this development institution. Recall that the Fund was established in 2016 by the Order of the Prime Minister S. Jeenbekov. Later, in 2018, S. Jeenbekov, who had already become President, noted with satisfaction the accuracy and timeliness of the creation of Guarantee Fund, which in a short period of work managed to achieve good results in the guarantee support for entrepreneurs of the republic.

    Thanks to the support of Guarantee Fund, a small business gets the opportunity to actively use bank loan resources. The activity statistics demonstrates its progressive development, the constant increase in the number of guarantees and amounts issued to SMEs, and most importantly, the guarantee coverage of entrepreneurs in all regions of the republic.



    What do the representatives of partner banks think about the book?

    Nurdin Ilebaev, Chairman of the Board of OJSC “CB Kyrgyzstan”:

    “The book is really interesting, and not only to credit specialists and bankers. It will certainly interest entrepreneurs, civil servants, and even scientists, because theoretical aspects and practical schemes of interaction are perfectly reflected both in scientific terms and for applied purposes.

    In 2011, in order to support entrepreneurship in the regions, guarantee funds were created, which main task was to support those entrepreneurs who did not have enough collateral to obtain loans from commercial banks. The authors, one of whom was at the forefront of creating these financial institutions, brilliantly reveal the mechanisms and schemes for entrepreneurs to get more loans for their business, that ultimately leads to an increase in turnover, financial stability, and the creation of additional jobs.

    As practice shows, the repayment of loans with the participation of guarantee funds is almost 100%. This is a great financial tool, proven and working to this day.

    For example, OJSC “Commercial Bank Kyrgyzstan” has been cooperating with guarantee funds since 2012. During this period, loans amounting to USD 3.1 million and KGS 200 million, respectively, were issued, and the number of borrowers who received loans with participation of guarantee funds amounted to about 300 people.”

    Opinion on the practical benefits of cooperation with OJSC “GF”

    Tologon Ibraev, General Director of LLC “Dos TJM”:

    “Our company has been producing tractors since 2016 in small batches. When we applied for guarantees in OJSC “GF”, they not only supported us, but also offered to build a plant for the production of tractors, electric tractors, attachments to them, as well as electric cars. After our consent, we were provided with consulting assistance and a business plan was developed, assistance was provided in obtaining a loan with a guarantee and a draft program for the restoration of agricultural engineering was developed.

    Such an approach places OJSC “GF” at the level of development institutions, and in combination with providing guarantees and consulting services, makes it an invaluable partner for entrepreneurs.”

    Bolot Tolonov, Director of PE “Akmatova”:

    “Our company conducts business in Kochkor district and produces cheese. To expand the range of products, increase the production of cheese and other dairy products, we requested support from OJSC “GF”. Here we received consultations and help in developing a business plan, promoting it in banks and obtaining a loan. Thanks to the cooperation with OJSC “GF”, our production is being developed, the quality of financial management is improving, and the geography of sales is expanding.”




    Nazarov, Private Entrepreneur:

     “I was pleasantly surprised when I was informed about the existence of such an institute as OJSC “Guarantee Fund” and the services it provides. Especially I would like to note the efficiency of the decision taken in the provision of guarantees, that is an important factor for entrepreneurs. I am sure that guarantees will become one of the main factors for promoting Kyrgyz products on foreign markets.”






    Khe Godun, General Director of LLC “Kyrgyz Korm”

     “In the modern world, for business development, it is necessary to attract loan funds, otherwise you can lose position in the market. The demand for the institute of guarantees in Kyrgyzstan appeared long ago and, I am very glad that we have such an institute. I am sure that OJSC “Guarantee Fund” will become a catalyst for business growth in the country. I would like to emphasize consulting support from OJSC “GF”, that allowed me to attract resources at a cost significantly lower than the market.”





    We would like to note that soon the book will appear on the shelves of Bishkek bookstores. We will inform you about this.





    SME support.

    From the beginning of 2018 and as of February 12, 31 guarantees were approved in the amount of KGS 58 million. Loans under guarantees as compared with the data as of February 8 increased by almost KGS 50 million and amounted to KGS 183.6 million (as of February 8, 136.4 million).

    In total, on the current date, OJSC “GF” approved 687 guarantees in the amount of KGS 813 million. Loans approved by partner banks amounted to KGS 2.936 billion. Soon it will be 3 billion! Follow the statistics!


    Consulting assistance to entrepreneurs

         Entrepreneurs can address OJSC “GF” for consulting services. The Fund’s specialists will provide the necessary information on the issues of obtaining guarantees, will give specific recommendations and help to develop a business plan.

        In the Year of Regional Development and Digitalization of the Country, taking into account the instructions of the President and Prime Minister of the Kyrgyz Republic, OJSC “GF” pays special attention to agricultural, processing and industrial enterprises in the regions of Kyrgyzstan, which growth and stable development ensure the creation of new and maintenance of existing jobs.



    Year of Regional Development and Digitalization of the Country.

    Regional representative of OJSC “GF” took part in retreat of the NBKR on financial literacy in Batken region.

    Since the beginning of February, the NBKR has been conducting an awareness campaign “Caravan of Financial Literacy”, together with CJSC “Interbank Processing Center” and the Savings Banks Foundation for International Cooperation of Germany. The campaign is held within the framework of the Year of Regional Development and Digitalization of the Country, the implementation of the Program to improve the financial literacy of the population.

    The purpose of such seminars is to present the role and functions of the National Bank, the protection of the rights of consumers of banking and microfinance services, as well as the digitalization of financial services and non-cash payments.

    The seminar was attended by representatives of the business community, local authorities, and bankers. Regional representative of OJSC “GF” Nurlanbek Abdamitov participated and made a presentation on the activities of OJSC “GF”. According to him, the seminar was interesting in a businesslike atmosphere.






    At the Jogorku Kenesh of the KR.

    On February 12, 2019, a meeting of the Economic and Fiscal Policy Committee of the Jogorku Kenesh of the Kyrgyz Republic was held, at which, besides other issues on the agenda, the draft laws “On Guarantee Funds in the Kyrgyz Republic” and “On Amendments to the Tax Code of the Kyrgyz Republic” were considered, and also heard information on the activities of OJSC “Guarantee Fund” for the period from December 2016 to 1 January 2019.

    The speaker on the draft law on guarantee funds was the Minister of Economy O. Pankratov. The meeting was also attended by the Chairman of the National Bank T. Abdygulov.

    A new version of the Law of the Kyrgyz Republic “On Guarantee Funds in the Kyrgyz Republic” was developed by OJSC “GF” jointly with the NBKR. In accordance with the proposed amendments, the NBKR will regulate and supervise the activities of the guarantee funds.

    On the second issue of amending the Tax Code the speaker was the deputy of the Jogorku Kenesh Kozhobek Ryspaev. The discussion of this issue was attended by the Minister of Economy O.M. Pankratov, Chairman of the NBKR T.S. Abdygulov and Chairman of the State Tax Service under the Government of the Kyrgyz Republic T.Zh. Abzhaparov.

    The draft of amendments and additions to the Tax Code of the Kyrgyz Republic has been prepared by Open Joint Stock Company “GF” and concerns the tax regulation of guarantee funds in terms of Loan Loss Provision (LLP). The initiation of the proposed amendments is related to the need to include guarantee funds in the list of financial and credit institutions, which, according to Article 207 of the Tax Code of the Kyrgyz Republic, are provided with deductions from the total annual income generated by LLP.

    Currently, LLP created by the guarantee funds is subject to double taxation.

    On the tenth issue of the agenda of the Economic and Fiscal Policy Committee, information on the activities of OJSC “Guarantee Fund” for the period from December 2016 to 1 January 2019 was considered and taken into account.

    On all questions arising from the deputies, detailed replies were given by speakers and invited heads of relevant departments.

    It should be noted that the first reading of these draft laws took place in early December 2018.