HISTORY OF CREATION AND DEVELOPMENT OF GUARANTEE FUNDS IN THE KYRGYZ REPUBLIC
In 2011, a new financial system began to form in the Kyrgyz Republic – guarantee funds, the purpose of which was to provide guarantees to small and medium-sized enterprises when obtaining bank loans.
At the initial stage, 4 pilot guarantee funds were created at the regional level – in the cities of Kara-Balta and Jalal-Abad, then in the city of Karakol and the village of Saray, Kara-Suuy district, Osh region, the founders of which were the mayors of these cities and Saraysky ayyl okmotu. Subsequently, guarantee funds were created in the Osh and Kant. Thus, 6 funds began to function in the republic.
In 2013, the Law of the Kyrgyz Republic “On Guarantee Funds in the Kyrgyz Republic” was adopted, which provided the legal basis for the activities of guarantee funds and the formation of a guarantee system. In 2016, the Government of the Kyrgyz Republic approved the Concept for the development of guarantee funds until 2020.
On December 12, 2013, the Association was created, which united all the guarantee funds of the republic.
Since October 2014, the Association of Guarantee Funds of the Kyrgyz Republic has been a member of the Association of Guarantee Funds of the European Union.
The activities of municipal guarantee funds contributed to the implementation of business projects of entrepreneurs, the creation of new jobs, support for existing jobs, an increase in payments to local budgets and Social Funds, and the development of the regional economy.
The successful results of the activities of regional guarantee funds made it possible to carry out larger support for small and medium-sized enterprises by creating an open joint-stock company “Guarantee Fund.”
OJSC “Guarantee Fund” (OJSC “GF”) was created by Order of the Government of the Kyrgyz Republic dated June 23, 2016 No. 288-r. The initial capital was formed at the expense of the republican budget in the amount of 72 million soms. An additional 3 million US dollars was allocated to the capital of the fund from the resources of financial support to ADB (Program “Improvement of the investment climate – subprogramme 2”).
As a result, the capital of OJSC “Guarantee Fund” amounted to 282 million soms at the end of 2016. Then the practical activities of the fund began.
In May 2017, the Foundation developed and began implementing the One District – One Enterprise (ODOE) program.
On June 27, 2017, the Fund Development Strategy for 2017-2022 was approved.
On December 26, 2017 ,The Committee on Economic and Fiscal Policy of the Zhogorku Kenesh of the KR decided to recommend that the Government of the Kyrgyz Republic bring the authorized capital of OJSC “Guarantee Fund” to 3 billion soms during 2018-2020.
In 2018, ADB recognized the Kyrgyz model of guarantee funds as successful and recommended implementation in the countries of Central Asia and the Caucasus.
In accordance with the order of the Government of the Kyrgyz Republic dated June 25, 2018 No. 217-r, the authorized capital of OJSC “Guarantee Fund” was increased by 300 million soms and amounts to 582 million soms.
OJSC “Guarantee Fund” developed and implemented the principles of accounting and provision of financial statements in accordance with the IFRS-9. This is a big step forward for the fund as a financial institution in the application of modern financial instruments.
By the decision of the general meeting of shareholders of November 6, 2018, a monitoring body was created in the structure of OJSC “Guarantee Fund” – the Board of Directors.
Accounts Chamber of the KR at the end of December, 2018 implemented audit of activity of OJSC “Guarantee Fund” from January 1, 2016 till December 31, 2017 following the results of which transparent and effective activity of OJSC “Guarantee Fund” which is carried out within requirements of the Law of KR “About Guarantee Funds in the Kyrgyz Republic” was confirmed and answers the purpose and tasks.
On December 5, 2018, the Board of Directors of OJSC “GF” approved the Development Strategy for 2019-2023.
On April 13, 2019, the President of the Kyrgyz Republic signed the Law of the Kyrgyz Republic “On Guarantee Funds in the Kyrgyz Republic,” in accordance with which the NBKR will regulate and supervise the activities of guarantee funds of the Kyrgyz Republic.
On April 13, 2019, the President of the Kyrgyz Republic signed the Law “On Amending the Tax Code of the Kyrgyz Republic,” according to which guarantee funds, along with other financial and credit institutions, will receive deductions of the amount of the created PPLD from the total annual income according to Article 277 of the Tax Code of the Kyrgyz Republic.
Since the entry into force of the new version of the law on guarantee funds, the NBKR has consistently capitalized the fund in 2019 and 2020. At the expense of the NBKR, the authorized capital increased to 4.132 billion soms.