From July 15 to July 19, 2024, a technical mission of the IMF for the Bank of the Lao People's Democratic Republic was held at the National Bank of the Kyrgyz Republic on the monetary policy framework and the specifics of conducting monetary operations.
The National Bank of the Kyrgyz Republic presented its experience in implementing and improving monetary policy.
National Bank of the Kyrgyz Republic decreased its policy rate down to 9.00 percent
On May 27, 2024, the Board of the National Bank of the Kyrgyz Republic decided to decrease the policy rate (key rate) by 200 basis points, down to 9.00 percent. The decision becomes effective as of May 28, 2024.
Inflation in the Kyrgyz Republic demonstrates stable slowdown: in May 2024, the annual growth rate of consumer prices was 4.4 percent (in December 2023 – 7.3 percent). The downward price dynamics resulted from the National Bank’s monetary policy conducted since 2022 being focused on restricting inflation growth and gradual decrease of the economic entities’ inflation expectations. In the structure of inflation, price growth for food products continues to decrease steadily which is particularly facilitated by a smooth decline of the world prices in the food markets.
Economic activity in the Kyrgyz Republic continues to demonstrate robust growth: in January-April 2024, the growth rate of real GDP was 7.4 percent. The sectors of construction and services provide the main contribution to economic growth: a significant expansion of fixed asset investment conditioned growth in the construction sector; in the services sector, as before, the retail and wholesale trade demonstrate an increase. Domestic consumption continues to expand amid an increase of the population’s real incomes and net inflow of the individuals’ remittances into the country.
The situation in the interbank money market remains stable. The short-term interest rates of the money market demonstrate a decrease upon change of the National Bank’s key rate. The banking system is characterized by a high level of excess liquidity in the national currency, creating prerequisites for further expansion of lending to the real sector of economy. Exchange rate flexibility is preserved in the domestic foreign exchange market. Within the framework of the floating exchange rate regime, the National Bank participates in the foreign exchange auctions to smooth sharp fluctuations of the exchange rate.
In the external economic environment, the dynamics of the main factors affecting the economy of the Kyrgyz Republic is formed ambiguously, however, in general, the degree of their impact is balanced. Tight monetary policy conditions of the world leading countries contribute to slowdown of the global inflation. The world food markets have become stable and prices for basic food products demonstrate stable decline. At the same time, the oil and gold markets remain volatile due to existing geopolitical tensions in some regions of the world.
Stable slowdown of the annual inflation rate in the Kyrgyz Republic together with expected formation of its value within the medium-term target of 5-7 percent by the end of the current year creates space for monetary policy easing. Under these conditions, the National Bank decided to decrease the policy rate down to 9.00 percent.
The monetary policy of the National Bank is focused on maintaining price stability in the country and creating conditions for ensuring macroeconomic strength. Therefore, the National Bank continues to assess the emerging external and internal factors of inflation, and, taking into account remaining risks in the external environment, will adhere to a prudent approach to conducting monetary policy.
In case of any risks, the National Bank does not exclude the possibility of making additional adjustments to the current monetary policy.
The next regular meeting of the Board of the National Bank of the Kyrgyz Republic on the policy rate is scheduled for July 29, 2024.
Press release
of the National Bank of the Kyrgyz Republic
The National Bank of the Kyrgyz Republic in accordance with the Constitutional Law of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic” puts into circulation a new 5000 Som banknote of fifth series of the national currency from May 10, 2024.
A portrait of the outstanding Kyrgyz actor and artist S. Chokmorov have been preserved on the front side of the banknote and the building of “Ala-Too” cinema on the reverse. The main color and size of banknote also remained unchanged.
The 5000 Som banknote contain three-levels of state-of art security features that provide reliable protection for the public against counterfeiting.
All banknotes of the national currency are legal tender in the territory of the Kyrgyz Republic and are subject to mandatory acceptance as means of payment regardless of the year of issue.
Security features of 5000 Som banknote of 2023 year
1. Watermark: Look for the multi-tonal portrait combined with numbers, visible when held to the light.
2. Security Thread visible as a broken line, and when viewed against the light it is a continuous line. Tilt the note to see a rapid movement up and down the thread’s background and the diamond-shaped logo of the National Bank pulsate.
3. See-Through Image: Look for the patterns on the front and reverse sides of the banknote complete a pattern of diamonds when held to the light.
4. Raised Ink: Feel the raised ink on the portrait, inscriptions and denomination.
5. Latent image: Tilt the note to see the C in a rainbow colour stand out from the background.
6. Colour-shifting ink: When banknote is tilted the colour of the pattern, which includes three-dimensional concentric rings, shifts from gold to jade.
7. Iridescent stripe (on the reverse side): The diamond-shaped logo of the National Bank and the denomination can be seen when the banknote is tilted.
National Bank of the Kyrgyz Republic decreased its policy rate down to 11.00 percent
On April 29, 2024, the Board of the National Bank of the Kyrgyz Republic decided to decrease the policy rate (key rate) down to 13.0 percent. The decision becomes effective as of April 30, 2024.
The inflation developments in the Kyrgyz Republic continue to slowdown. In April1 2024, the annual inflation rate amounted to 5.2 percent, having decreased from 7.3 percent in December 2023, which was near the lower rate of the medium-term monetary policy target of 5-7 percent.
In the structure of inflation, price growth for food products slowed down significantly (from 3.4 percent in December 2023 down to 1.1 percent in April 2024), as well as due to decline in prices in the world food markets. The growth rates of prices for non-food products and services decrease, although with more restrained dynamics.
There is high economic activity in the Kyrgyz Republic. At the end of January-March 2024, the real GDP increased by 8.8 percent. As before, the sectors of services, construction and processing industry made the main input in the economic growth. Domestic consumption remains elevated, as well as due to growth in consumer lending and an increase in the net inflow of remittances into the country.
Despite the continued uncertainty in the external economic environment, there is a decrease of external factors influence. The global and regional inflation rate is gradually declining due to long-lasting tight monetary conditions preserved by the regulators of the leading countries thereby weakening the external inflation environment together with a decline in the world food prices.
The banking sector of the country remains stable and demonstrates growth of the key indicators. In general, the commercial banks have sufficient liquidity that creates a basis for further lending to the real sector of the country. The short-term interest rates of the money market continue to form within the interest rate corridor set by the National Bank. The domestic foreign exchange market is stable.
The monetary policy of the National Bank conducted since the beginning of 2022 contributed to limiting growth of the inflationary pressure and ensured stabilization of the price dynamics in the country, which resulted in formation of the current inflation within the medium-term target and decrease of the economic entities’ inflationary expectations. Under these conditions, the National Bank decided to decrease the policy rate down to 11.00 percent. This decision is in line with the National Bank’s monetary policy focused on maintaining price stability in the country and creating conditions to ensure macroeconomic stability.
The National Bank continues to assess the emerging external and internal factors of inflation and, taking into account remaining risks in the external environment and the forthcoming improvement of the state tariff policy, still adheres to a prudent approach to further easing of monetary conditions.
In case of any additional risks, the National Bank does not exclude the possibility of making necessary adjustments to the current monetary policy.
The next regular meeting of the Board of the National Bank of the Kyrgyz Republic on the policy rate is scheduled for May 27, 2024.
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Press release of the National Bank of the Kyrgyz Republic
The National Bank of the Kyrgyz Republic from April 30, 2024 puts into circulation a collection silver coin “10 Years of the Eurasian Economic Union” of the series “Historical Events”.
May 29, 2024 is the 10-year anniversary since signing the Treaty on the Eurasian Economic Union. The Eurasian Economic Union (EAEU) is an international organization of regional economic integration formed to create conditions for stable development of the economies in the member states, to make a single market for goods, services, capital and labor resources within the EAEU, to provide comprehensive modernization, cooperation and increasing the competitiveness of the national economies in order to improve the living standards of the population in the member states. The EAEU currently comprises five countries: Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia.
The main plot of the obverse of the “10 Years of the Eurasian Economic Union” coin is the EAEU official emblem, around which there are images of the flags of the EAEU member countries as well as the elements of the EAEU emblem symbolizing the dynamics and development. The EAEU anniversary date “10 жыл” (“10 years”) is depicted on the left side of the coin. The inscription: “Евразия экономикалык бирлиги / Евразийский экономический союз” (“Eurasian Economic Union”) is placed around the coin circumference.
The coat of arms of the Kyrgyz Republic is in the center of the reverse of the coin. The right side of the coin contains the national ornaments of the EAEU member countries, as well as the metal alloy (Ag 925) and the weight of the coin (31.10 g). The inscription: “Кыргыз Республикасынын Улуттук банкы /Национальный банк Кыргызской Республики” (“National Bank of the Kyrgyz Republic”) is in the upper and lower part of the coin. The denomination of the coin (10), the graphical sign of som (C) and the year of coin issue “2024” are shown in the left part of the coin.
The coin “10 Years of the Eurasian Economic Union” is the legal tender in the territory of the Kyrgyz Republic.
Specifications of the coin
|
Name |
10 Years of the Eurasian Economic Union |
|
Face value |
10 Som |
|
Metal (alloy) |
Ag 925 |
|
Additional using technology |
Color printing |
|
Diameter (mm) |
38,61 |
|
Weight (g) |
31,10 |
|
Quality |
Proof |
|
Issue limit (pcs) |
500 |
Each collection coin is placed in an acrylic capsule and packed in a separate box with a quality certificate attached.
The sale price of the coin is 5 780 Som. The collection coins are sold at the cash desks of the National Bank institutions on working days from 9.00 a.m. till 2.00 p.m., as well as through the website for sale of the numismatic values: www.numizmat.nbkr.kg.
On April 19, 2024, the "Digital Som" project team, based on the results of proposals received from central bank digital currency (CBDC) vendors/developers in response to the request for information with Functional and Technical Requirements for the prototype of the digital som, presented information on companies, technological solutions, functional capabilities and results of evaluation and self-assessment, according to the criteria for selection of CBDC vendors, to the Steering Committee on Digital Som of the National Bank (hereinafter referred to as the Steering Committee) for consideration.
At the meeting of the Steering Committee, the "Digital Som" project group also demonstrated a demo version of the digital som on the (blockchain) platform of one of the providers of CBDC. The "Digital Som" project team will continue further work on research, analysis of proposals, as well as negotiations with CBDC providers within the framework of the project.
On April 19, 2024, the interagency working group (IWG) completed its task to conduct a regulatory impact analysis (RIA) on the development of legal and regulatory issues related to the introduction of the digital som.
As part of the RIA, the IWG formulated amendments to ten legislative acts of the Kyrgyz Republic regarding the introduction of the digital som (hereinafter referred to as “the bill”). The further promotion of the bill will be carried out under the Law “On Normative Legal Acts of the Kyrgyz Republic”.
On March 29, 2024, the project group "Digital Som" of the National Bank of the Kyrgyz Republic held the second meeting of the interdepartmental working group (hereinafter - IWG) on conducting regulatory impact analysis (hereinafter - RIA) to elaborate legal and regulatory issues related to the implementation of the digital som.
During the meeting, the IWG discussed the consolidated version of the draft RIA on the legal status of the digital som, the benefits of the digital som, the achievement of quantitative and qualitative indicators of the project's success, and several changes to be made to the legislative acts of the Kyrgyz Republic. All the above-mentioned should be submitted by the IWG to the Digital Som Project Team.
The Digital Som Project Group of the National Bank of the Kyrgyz Republic (hereinafter referred to as "the National Bank") announces that, as part of the request for "Functional and Technical Requirements for the Digital Som Prototype," it has received proposals from twelve interested companies for testing the digital som prototype in an experimental mode (Sandbox). These proposals are aimed at exploring central bank digital currencies (CBDCs).
The companies that have submitted their proposals include:
1. Axellect;
2. DCM, Ltd.;
3. EMTECH, Inc.;
4. FIS, Inc.;
5. G+D Filia GmbH;
6. Knox Networks, Inc.;
7. MONTRAN;
8. Nahmii, Ltd.;
9. R3 Corda Ltd.;
10. SICPA/Nabatech Inc.;
11. TCS Quartz, Ltd.;
12. Xiamen Strait Chain Technology Co.;
After a thorough analysis and evaluation of the proposals submitted by these vendors, the National Bank will select a CBDC vendor to develop a demo version of the digital som. This includes simulating payments and conducting initial test operations in a controlled environment using the digital som. The selection criteria will focus on blockchain platform technology, innovation potential, technological reliability, security of the proposed solutions, speed of payments, and the ability to integrate effectively with the existing financial infrastructure.
Testing the prototype of the digital som is a strategic initiative of the National Bank in the digitalization of the economy and financial system of the Kyrgyz Republic. The introduction of digital currency aims to enhance financial inclusion, simplify the processes of transfer and payment, and increase the transparency and security of financial transactions.
The National Bank will provide detailed information on the project's progress and test results through its official channels as the project stages are completed.
National Bank of the Kyrgyz Republic keeps its policy
rate unchanged at 13.00 percent
On February 26, 2024, the Board of the National Bank of the Kyrgyz Republic decided to keep the policy rate (key rate) unchanged at 13.00 percent. The decision becomes effective as of February 27, 2024.
In February 2024, the annual inflation rate in the Kyrgyz Republic was 5.0 percent, having decreased from 7.3 percent in December 2023. Growth of prices for food products continues to slow down faster, meanwhile prices for non-food group of goods and services show more restrained downward trend. Stable and strong domestic demand, as well as the impact of tariff policy revision, in particular for public transport services, were the main factors to form actual inflation.
In general, external economic environment for the economy of the Kyrgyz Republic is characterized by stable and high uncertainty due to geopolitical situation worldwide and volatility of prices in the world commodity markets. There is gradual slowdown in global inflation as a result of tightening monetary policies by the leading countries.
Economic activity in the Kyrgyz Republic shows stable upward trend. In January 2024, the real GDP increased by 7.4 percent due to the most significant input of the sectors of industry, services and construction. An increase in real wages of the public and private sectors, growth in consumer lending and rise in net inflows of remittances into the country support domestic consumption. Implementation of the fiscal consolidation policy has a restraining effect on price movement in the country.
The banking sector remains stable and demonstrates growth of the main indicators. The resource base of the commercial banks is expanding to demonstrate strengthening of the population’s savings behavior. Interbank money and domestic foreign exchange markets remain stable. In general, the banking system demonstrates high level of excess liquidity in the national currency.
In the short term, the trajectory of the general inflation rate in the country is expected to be within the medium-term inflation target of 5-7 percent. Measures of the National Bank will be focused on further reducing the growth rates of prices for non-food group of goods and services and, in general, the level of core inflation, which, currently, still remain above the inflation target.
Taking into account the current conditions and trends for development of internal and external environment, the National Bank decided to keep the policy rate unchanged at 13.00 percent. This decision contributes to limiting pro-inflationary factors and keeping the inflation rate within the target values of 5-7 percent in the medium term. Maintaining the current monetary conditions will reduce the level of inflation expectations of the population and economic entities.
The National Bank continues to monitor the current situation in the external environment and in the domestic economy. In case of any risks, the National Bank does not exclude the possibility of making necessary adjustments to the current monetary policy.
The next regular meeting of the Board of the National Bank of the Kyrgyz Republic on the policy rate is scheduled for April 29, 2024.
The official information
of the National Bank of the Kyrgyz Republic
The National Bank of the Kyrgyz Republic in accordance with the Constitutional Law of the Kyrgyz Republic “On the National Bank of the Kyrgyz Republic” introduces into circulation the new banknotes in denominations of 20, 50 and 100 Som of fifth series of the national currency from February 15, 2024.
The principal design of new banknotes of the national currency remain a reflection of the historical and cultural heritage of Kyrgyzstan and are unchanged. The portraits of representatives of art and culture have been preserved on the front of the banknotes and notable sides of the republic on the reverse. The main color and size of banknotes also remained unchanged.
The new Kyrgyz banknotes contain three levels of security features that provide reliable protection for the public against counterfeiting.
Banknotes of the fifth series will be put into circulation gradually as part of the planned replenishment of banknote stocks as the stocks of banknotes of the previous series are depleted.
All national banknotes are legal tender in the territory of the Kyrgyz Republic and are subject to mandatory acceptance regardless of the year of issue.
Security features of new 2023 banknotes in denominations of
20, 50 and 100 Som
1. WATERMARK. Look for the multi-tonal portrait combined with numbers, visible when held to the light.
2. SECURITY THREAD visible as a broken line, and when viewed against the light it is a continuous line. Tilt the note to see a rapid movement up and down the thread’s background and the diamond-shaped logo of the National Bank pulsate.
3. SEE-THROUGH IMAGE. Look for the patterns on the front and reverse sides of the banknote complete a pattern of diamonds when held to the light.
4. RAISED INK. Feel the raised ink on the portrait, signature and denomination.
5. LATENT IMAGE. Tilt the note to see the C in a rainbow colour stand out from the background.
6. COLOUR-SHIFTING INK (only on the 100 Som banknote). The pattern is shifting from gold to jade, and moving double rings can be seen when the note is tilted.
7. IRIDESCENT STRIPE (on the reverse side). The diamond-shaped logo of the National Bank and the denomination can be seen when the banknote is tilted.
National Bank of the Kyrgyz Republic keeps its policy rate unchanged at 13.00 percent
On January 29, 2024, the Board of the National Bank of the Kyrgyz Republic decided to keep the policy rate (key rate) unchanged at 13.00 percent. The decision becomes effective as of January 30, 2024.
Inflationary developments in the Kyrgyz Republic continue to slow down. In December 2023, the annual inflation rate was 7.3 percent, in January 2024 – 5.9 percent. In the structure of inflation, there was steady slowdown in the commodity group of food products in annual terms from 15.8 percent in December 2022 to 1.9 percent in January 2024. At the same time, prices for non-food products and services demonstrate slower decline, reflecting to some extent the impact of administrative measures taken to revise tariff policies for certain types of goods and services.
The external environment conditions still remain the key factors for inflationary processes in the Kyrgyz Republic and their development indicates slower return of core inflation to the target rates. Price environment of the global food and commodity markets remains heterogeneous: the world prices for food products gradually decline, however the global oil and gold markets demonstrate price volatility. Under these conditions, further decrease of core inflation and inflation expectations of the population and economic entities will be the main priority in development and implementation of the monetary policy during 2024.
Economic activity of the Kyrgyz Republic remains high. At the end of 2023, the real GDP increased by 6.2 percent due to the most significant contribution of the services and processing sectors. Domestic demand remains increased as a result of growing consumer lending, rise of wages and increase of remittance inflows.
Conducted monetary policy determines strengthening of the population’s savings behavior. There is expansion of the commercial banks’ resource base. According to the results of 2023, the volume of deposit base increased by 27.3 percent compared to 2022 and amounted to about KGS 431.3 billion. At the same time, the banking sector still shows active lending to the economy. In 2023, the volume of the loan portfolio increased by 26.3 percent, up to KGS 257.8 billion. Generally, the key performance indicators of the financial and credit organizations indicate a sufficient margin of safety, which contributes to maintaining the stability of the banking system. The commercial banks have sufficient liquidity in the national currency. The domestic foreign exchange market remains relatively stable.
Taking into account the conditions for development of external and internal economic environment, as well as the dynamics of core inflation, which still remains at the level of two-digit indicators, the National Bank decided to keep its policy rate unchanged at 13.00 percent. The decision is aimed at further slowing down inflationary developments in the country and keeping the inflation rate within the target values of 5-7 percent in the medium term.
The National Bank continues to monitor the current situation in the external environment and in the domestic economy. In case of any risks, the National Bank does not exclude the possibility of making necessary adjustments to the current monetary policy.
The next regular meeting of the Board of the National Bank of the Kyrgyz Republic on the policy rate is scheduled for February 26, 2024.