ь On December 24, 2010, the National Bank of the Kyrgyz Republic issued licenses to the OJSC “Zalkar Bank” No.049 and No.049/1 for the right to perform banking transactions in the national and foreign currencies. This bank was created in accordance with the Kyrgyz Republic Law “On conservation, liquidation and bankruptcy of banks” by the method of restructuring of the bankrupt bank OJSC “AsiaUniversalBank”; this bank is not a legal successor of the OJSC “AsiaUniversalBank”. 

ь On December 1, 2010, Board of the National Bank of Kyrgyz Republic considered the report on monetary policy for the 9 months of 2010. 

The report noted that the political events of April and June 2010 and their consequences introduced considerable adjustments into the monetary policy. In terms of risks, related to systemic crisis in the banking system and the threat of deep stagnation against moderate inflation during first months after April, actions of the National Bank of the Kyrgyz Republic were aimed primarily at ensuring of stability of the banking and financial system as well as at support economic growth. Thus, during the 2nd quarter, the National Bank of the Kyrgyz Republic considerably reduced volume of notes in circulation up to 200 million soms at the end of June from 1 billion soms as of the end of March. In May, the size of obligatory reserves for commercial banks decreased from 9.5 percent to 8 percent and the base rate for activity of the Specialized Fund for Banks Refinancing decreased from 8 percent to 7 percent. 

Acceleration of inflation processes, started in July and occurred as a result of external price shocks, caused by climatic cataclysms in large countries – manufacturers of cereal crops against growth of prices for energy carriers, provided activation of activities of the National Bank of the Kyrgyz Republic with regard to sterilization of excess liquidity. National Bank of the Kyrgyz Republic increased supply of the NBKR notes, volume of which in circulation increased to 335 million soms.  

In the domestic foreign exchange market there was a stable excess of demand for foreign currency against its supply, herewith there was not the seasonal summer strengthening of the national currency. In order to smooth acute fluctuations of the exchange rate, the National Bank of the Kyrgyz Republic performed foreign exchange interventions: within the first 9 months, net sale of the National Bank of the Kyrgyz Republic amounted to 186 million US dollars and exchange rate of US dollar increased by 5.8 percent to 46.6377 KGS / USD.  

Monetary base increased by 7.4 percent during the first nine months. Consumer price index amounted to 10.3 per cent (September 2010 / December 2009), the annualized inflation rate was 12.1 percent (September 2010 / September 2009). 

In January-September, there was decrease in GDP in real terms by 0.5 percent due to reduction of trade and agricultural production. State budget deficit amounted to 5.4 billion soms or 3.7 percent from GDP. Preliminary data of the external sector of the economy showed an increase in the volume of foreign trade by 8.2 percent, while export increased by 11.4 percent, while import increased by 6.5 percent. There was also increase in the inflow of money transfers. 

The report noted that in recent months against increased inflationary pressure in combination with downfall of GDP, the National Bank of the Kyrgyz Republic had to solve difficult tasks, related to balancing between the risk of inflationary burst and the risk of economic recession. 

In the course of discussion of the report by members of the Board, it was noted that there was still a low level of savings and high level of consumption at low productivity, which is a structural problem of the economy. During exchange of opinions about the situation in the banking sector, it was noted that at relatively high level of excess liquidity, the banks activity in the market of government securities remained rather low. 

There were some opinions that in future year the demand for money will be supported due to restoration works in Osh and Jalal-Abad cities, arrangement of presidential election; also growth of money supply will be performed due to the sector of governmental finances. It was noted that planned volumes of governmental expenses and deficit of the state budget in 2011 cause some concerns as they may become one of the key internal factors for inflation risks. Members of the Board noted that in current conditions, availability of the Government mid-term economic program is of high importance.  

In the course of consideration of the report on monetary-and-credit policy, perspectives of further cooperation with the International Monetary Fund were discussed. 

As per results of arranged discussion, members of the Board approved the report on monetary-and-credit policy for 9 months of 2010.  

ь National Bank of the Kyrgyz Republic informs about publishing of the financial statement and the information about execution of economic standards by commercial banks and financial-credit institutions for the 2nd and 3rd quarter of 2010: 

For the second quarter of 2010 

For the third quarter of 2010 

News of non-banking financial and credit institutions 

The National Bank of the Kyrgyz Republic issued licenses/certificates to the following non-banking financial institutions and exchange offices: 

1. LLC MCC “Kurjun” (certificate on accounting registration No. 328, dated December 21, 2010 for micro crediting of physical and legal entities). Legal address: 33-44, micro-district No.8, Bishkek; 

2. LLC MCC “Extra Credit” (certificate on accounting registration No. 329, dated December 21, 2010 for micro crediting of physical and legal entities). Legal address: Elebaeva Street, Tyup village, Tyup rayon, Issyk-Kul oblast (cafй “Bereke”); 

3. LLC MCC “Kench-ten” (certificate on accounting registration No. 330, dated December 24, 2010 for micro crediting of physical and legal entities). Legal address: 1, Kojevennaya Street, Bishkek; 

4. PE Shermatov Ravshanbek Kamilovich (License No. 4537, dated December 20, 2010 for conducting cash foreign exchange transactions). Legal address: central market, Jalalabat city, Jalalabat oblast (orienting point: atelier “Maryam”); 

Inter-bank payments 

Indices of the national payment system “Elcart” *