Economic week of Kyrgyzstan Aug. 26-31, 2019

The past week was characterized by a large amount of information about the industry. And the main attention was focused on the Kumtor gold mine - the results of new negotiations and financial relations, including the creation of new Funds, since the state bodies most involved in Kumtor, represented by their leaders, gave a briefing in the Government House of the Kyrgyz Republic. In addition, information about the volume of coal reserves in the country and their effective use was presented during the week. And also economic events in the country are related to new data on virtual money or mining. Several bills of the economic and financial plan were submitted for general discussion.
More coal. This week, the State Committee for Industry, Energy and Subsoil Use of the Kyrgyz Republic submitted a draft law "On Coal" for public discussion.
According to the explanatory notes, the coal industry in the country is one of the leading sectors of the fuel and energy complex (FEC).
The existing coal reserves in Kyrgyzstan can fully meet the needs of the republic's economy in solid fuel for many years.
At the same time, the need for more active development of the coal industry and increased production is determined by the available reserves in the country, which can not only cover the needs of the local population, but also provide exports to neighboring countries.
There are about 70 major coal deposits in the republic. As of Jan. 1, 2018, over 1.4 billion tons of coal are listed on the state balance of the Kyrgyz Republic. At the same time, most of the reserves are concentrated in the south of the republic (more than 75%), where deposits of the Uzgen coal, South Ferghana brown coal, and North Ferghana coal deposits are developed. The northern region is characterized by the development of the Kavak brown coal basin and the Zhyrgalan coal deposit.
The brown coal dominated - more than 55% in the structure of diluted coal reserves, hardcoal - about 40%, coking coal - about 5%, which are concentrated on deep horizons and require additional geological exploration and significant capital expenditures for development.
Mining taxes. The Ministry of Economy of the Kyrgyz Republic submits for a public discussion a draft law "On Amending the Tax Code of the Kyrgyz Republic" and a draft resolution "On a draft Law On Amending the Tax Code of the Kyrgyz Republic".
A new draft law has been developed with the aim of introducing taxation of mining cryptocurrencies in Kyrgyzstan, which will increase state budget revenues, and also contribute to the principle of fair taxation in Kyrgyzstan, according to which taxation in the Kyrgyz Republic should be universal, regardless of the type of activity carried out.
The development of modern digital technologies currently leads to the emergence of new types of economic activity, one of which is cryptocurrency mining.
The essence of cryptocurrency mining is that many computers that are not connected to each other through a special program (miner) solve mathematical computational problems necessary for the operation of the blockchain network of bitcoin.
As a result of this, bitcoins and other cryptocurrencies (altcoins) are created, which miners receive as a reward for the work done by charging to a special wallet address (account).
Thus, the result of this activity is the creation of a new asset, which leads to income for persons who create this asset.
Non-banking finance. The State Service for Financial Market Regulation and Supervision of the Kyrgyz Republic submitted for a public discussion a draft government decree "On approval of the Development Strategy for the non-banking financial market of the Kyrgyz Republic for 2019-2023".
The draft Strategy represents a vision for the development of the non-banking financial market of the Kyrgyz Republic for 2019-2023.
The main objective of the Strategy is to ensure accelerated economic growth through achieving sustainable and efficient functioning of the non-banking financial market, satisfying the needs of the real sector of the economy in financial resources, providing high-quality services in a competitive environment and ensuring the transformation of savings into investments.
Money from Kumtor. For six months of 2019, Kumtor produced 9.37 tons of gold. According to data of chairman of the State Committee for Industry, Energy and Subsoil Use Emil Osmonbetov, the share of Kumtor in GDP is about 9%, and in industry - 18%.
"From the beginning of the year, the company transferred taxes and obligatory payments in the amount of more than KGS 4.22 billion. The document that entered into force was signed on Sept. 11, 2017 and contained a list of mutual obligations that the parties had to fulfill in order to take effect," he said.
Osmonbetov noted that the total revenue under the Agreement until 2026 was USD 87 million.
But our Government was not satisfied with the previously achieved volumes of financial revenues under the Agreement, and as a result of additional negotiations, this amount was increased up to USD 150 million, including funds for exploration," said Abylgaziev.
Meanwhile, it was also announced that negotiations of the Kyrgyz government with Centerra Gold Inc will be continued.
According to chairman of the board of Kyrgyzaltyn OJSC Almaz Alimbaev, the increase in revenues from Kumtor to the state budget is a big victory for the Government of the Kyrgyz Republic.
New Funds. Last week, it was announced that two funds were created in the framework of the Kumtor project in Kyrgyzstan.
According to Minister of Economy of the Kyrgyz Republic Sanjar Mukanbetov, the first Fund is environmental. "This fund has received USD 50 million, plus USD 30.7 million will be received annually. This agreement was concluded in 2017-2018. In addition, it was increased by USD 7.4 million." He also explained that the fund will be managed by the Supervisory Board.
The second is the Regional Social Partnership Fund. "The initial contribution to the Fund will be USD 5 million. Then, annually, 0.4% of the revenues of the Kumtor company will go there. These funds will be directed to all regions of the country," added the Minister of Economy. The Fund was headed by ex-Minister of Finance of the Kyrgyz Republic Adylbek Kasymaliev, and Ulugbek Arstanbaev will manage the Fund for the Development of Nature.
According to the Ministry of Justice of the Kyrgyz Republic, both funds were registered on August 23. The founder of the Fund for the Development of Nature is the State Agency for Environmental Protection, and the founder of the Fund for Social Partnership for the Development of Regions is the Ministry of Economy of the Kyrgyz Republic.
Stocks at Kumtor. Emil Osmonbetov, Chairman of the State Committee for Industry, Energy and Subsoil Use of the Kyrgyz Republic, told in detail how many gold reserves remained at Kumtor.
During a briefing at the Government House, he noted that in the central part of the mine there are 77.592 kg, in Sary-Tor - 16.614 kg, in the South-West - 10.156 kg.
"In total, Kumtor has 104.345 kg of gold," he added.
Dividends from Kumtor. This week, it was officially announced that the share of Kyrgyzstan in Centerra Gold Inc is USD 740 million (26.6%). According to chairman of the board of Kyrgyzaltyn OJSC Almaz Alimbekov, the company's shares doubled in half a year.
"At the end of 2018, the amount of our shares amounted to USD 335 million," he said.
Alimbekov also said that negotiations with Centerra Gold Inc on dividend payments are ongoing.
"We did receive dividends for two years. They were ceased when controversial processes began. Negotiations for today are resumed. We don’t put an end to the agreement," he added.
Kabar News Agency