The Board of the National Bank of the Kyrgyz Republic (the NBKR) has kept the discount rate (key rate) at 5 %. This was announced by the official website of the NBKR.
The NBKR noted that the development of the Kyrgyz economy is still influenced by external economic conditions and factors which have formed due to the measures to stop the spread of coronavirus. Despite the gradual recovery of economic activity in the world, the situation in the external sector remains uncertain.
It is expected that the return of economies to pre-crisis levels will take longer than previously predicted.
The spread of the pandemic and its negative consequences were reflected in a sharp decline in economic activity in Kyrgyzstan in almost all sectors of the economy, except for the agricultural sector and “Kumtor” enterprises. The indicators of the real sector of the economy are in the negative zone, having reached their lowest values over the past few years. The volume of remittance inflows to the country remains below last year’s values, leading to more moderate domestic consumption.
The monetary environment remains stable. The short-term segment of the money market demonstrated an increase in rates within the background of an increase in the activity of market participants, while their fluctuations occurred near the key rate within the interest rate corridor established by the National Bank.
The banking system maintains a high level of excess liquidity, which is formed mainly due to expenditure transactions through the budget channel.
The National Bank continues to carry out sterilization operations, mainly in the short segment of the money market.
The deposit base and the loan portfolio of the commercial banks demonstrate stability in the negative economic environment, continuing their progressive growth. The domestic foreign exchange market is relatively stable, the volatility of foreign exchange rates against the som (KGS) has decreased.
“Taking into account the prerequisites for the external environment development and the emerging internal economic conditions, the National Bank decided to maintain the discount rate at 5 percent, taking into account the need to maintain measures to stimulate the real sector of the economy. In case of any risks, the National Bank has sufficient instruments to mitigate their consequences,” the statement says.
The next meeting of the Board of the National Bank on the size of the discount rate will be held on September 28, 2020.