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  • EDB forecasts slowdown in consumer price index growth in 2021

    Inflation continues to grow and reached the NBKR target of 5-7%. This is stated in the analytical material of the Eurasian Development Bank.

    In March 2020, the consumer price index increased to 5.9% from 4.1% in February and 3.2% in January.

    There is a tendency for food products to become more expensive, associated primarily with the rising cost of grains, meat, vegetables, and fruits.

    In February, excise taxes on tobacco products were increased, which further increased the cost of the “alcoholic drinks and tobacco products” basket. Non-food products and services have a restraining effect on inflation.

    Analysts believe that the trend of accelerating growth in domestic prices in the coming moths will continue due to ta short-term surge in domestic demand from the population forming their own stocks and the depreciation of the KGS against the USD.

    In 2021, the growth rate of the consumer price index will begin to slow down amid low external inflationary background and weakening economic activity in the country.

    The NBKR has developed a draft resolution on the re-registration of banks in microfinance organizations

    The National bank has developed a project to amend the resolution of the Board of the National Bank of the Kyrgyz Republic “On approval of that Regulation “On licensing the activities of microfinance companies” dated December 23, 2015 No. 78/26. Such information is available on the website of the regulator.

    The proposed changes relate to requirements regarding the re-registration of a commercial bank into a microfinance company.

    The microfinance sector needs to submit its comments and suggestions to the draft resolution no later than May 22, 2020.

    According to the draft, amendments are made to the procedure for terminating banking operations by a commercial bank registered with IFC.

    Changes in the termination of banking operations are due to the experience of transforming individual commercial banks into IFCs and taking into account risks for the banking sector. In addition, the project proposes the provision of a period for bringing economic standards and requirements in line with the requirements of regulatory legal acts.

    According to the proposed changes, in case of non-compliance by a commercial bank re-registered with IFC with the requirements of regulatory legal acts established for IFC attracting deposits, the Deputy Chairman / Member of the Board of the National Bank in charge of supervision and licensing is entitled to establish a restriction on the right to attract term deposits.

    The draft also proposes a norm that IFC officials who have been approved for a similar position in a commercial bank that is undergoing re-registration with IFC over the past 12 months do not re-approve with the National Bank, and are limited to submitting questionnaires tin the form of Appendix 1 to this Provision.

    Within the framework of the project, changes are made in terms of coordination of amendments and additions to the charter of microfinance companies, coordination of officials of microfinance companies.