Annual Report on Exchange Arrangements and Exchange Restrictions 2005


International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of December 31, 2004)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: March 29, 1995.
Exchange Arrangement
CurrencyThe currency of the Kyrgyz Republic is the Kyrgyz som.
Exchange rate structureUnitary.
Managed floating with no predetermined path for the exchange rateThe official exchange rate of the som against the dollar is defined as the average-weighted exchange rate of interbank foreign exchange market transactions for the week. The National Bank of the Kyrgyz Republic (NBKR) participates and intervenes in the interbank foreign exchange market to smooth temporary market fluctuations as necessary.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketNo.
Arrangements for Payments and Receipts
Prescription of currency requirementsSettlements may be made in any convertible currency.
Payments arrangements
Bilateral payments arrangementsThere are agreements on settlement procedures with China, Malaysia, and countries of the CIS.
Regional arrangementsThere are agreements with the Interstate Bank of the CIS to participate in the national gross settlement system.
Administration of controlThe NBKR has responsibility for managing international reserves and for issuing foreign exchange licenses to commercial banks and to foreign exchange bureaus.
International security restrictions
In accordance with IMF Executive Board Decision No. 144-(52/51)The authorities notified the IMF of certain exchange restrictions that have been imposed in accordance with the relevant UN resolutions.
In accordance with UN sanctionsMeasures have been taken to restrict financial transactions and to freeze accounts of certain individuals or organizations associated with terrorism pursuant to (1) relevant UN Security Council resolutions and (2) the list of current terrorist organizations designated by the U.S. Secretary of State.
Payments arrears
OfficialAn agreement was reached in March 2002 with the Paris Club to restructure the debt-service payments due on the Kyrgyz Republic’s bilateral debt for the period December 6, 2001, through December 5, 2004. Bilateral agreements were reached with certain Paris Club members (Denmark, France, Germany, Japan, and Russia) and with certain countries that are not Paris Club members (China, India (April 26, 2004), Korea, Pakistan (January 31, 2004), and Turkey). At the conclusion of the consolidation period, the Kyrgyz Republic submitted a request to the Paris Club for further restructuring and deferral of current payments on its bilateral debt. As a consequence, from December 6, 2004, through December 31, 2004, the Kyrgyz Republic accumulated technical arrears on current payments to a number of bilateral creditors (France, Germany, Japan, Korea, Pakistan, Russia, and Turkey). On December 31, 2004, debt consolidation and restructuring agreements were signed with all the Kyrgyz Republic’s bilateral creditor countries. Also on that date, an agreement was reached with Kuwait to defer payments of principal against debt.
Controls on trade in gold (coins and/or bullion)All gold produced is sold at market prices. The government and the NBKR have priority in purchasing and also the right to participate as sellers in the market. If the government and the NBKR do not exercise that right, the gold is sold either in the domestic market or abroad. Transactions in precious metals (standard and uniform ingots) performed by commercial banks are governed by Regulation No. 30/5, as amended. The purchase and sale of uniform ingots of precious metals domestically by natural and juridical persons are governed under Resolution No. 834.
Controls on exports and imports of banknotesImports and exports of foreign currency are not subject to restriction, provided that they are declared to customs for statistical purposes.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyYes.
Held abroadThese accounts are permitted and must be registered with the NBKR for statistical purposes.
Accounts in domestic currency held abroadBalances of funds in som accounts opened by resident banks at foreign banks are subject to statistical reporting.
Accounts in domestic currency convertible into foreign currencyBalances of funds in som accounts opened by resident banks at foreign banks are subject to statistical reporting.
Nonresident Accounts
Foreign exchange accounts permittedYes.
Domestic currency accountsBalances of som accounts opened in Kyrgyz banks are subject to statistical reporting.
Convertible into foreign currencyYes.
Blocked accountsNo.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for importsNo.
Documentation requirements for release of foreign exchange for importsNo.
Import licenses and other nontariff measuresLicenses are required for imports of alcohol and alcohol products, raw materials and components for the production of commercial petroleum products, and tobacco. Effective February 24, 2004, the customs stamps and mandatory customs labeling required for imported medicines no longer apply.
Negative listThis list includes weapons; ammunition; explosives; poisons; psychotropic narcotics; publications, photographs, photographic plates, negatives, exposed film, video recordings, and graphic works containing information that may harm the political and economic interests of the Republic, state security, or public order; ozone-depleting substances and products; and other articles prohibited and regulated by law. Imports of nuclear materials, technologies, and equipment; special nonnuclear materials; and radioactive sources of ionizing radiation are regulated by the government.
Open general licensesOpen general and single-use licenses are issued. OGLs are issued for a period of up to one calendar year. Imports under OGLs may be carried out under one or several contracts, and the nature of the transactions must be specified. The following products are subject to licensing: encryption equipment; weapons and military hardware, and special equipment for their production; military uniforms, clothing, and accessories; specifications and technical documentation for products intended for military use; gunpowder and explosives; nuclear materials, technologies, equipment, and devices; special nonnuclear materials; sources of radioactive radiation; materials, equipment, technologies, and scientific and technical information that are intended for peaceful purposes but could be used in the creation of weapons of mass destruction; precious metals, from ores to scrap and waste; natural precious stones, from powders to recovered materials; precursor chemicals; highpotency poisons; hazardous waste; narcotics and psychotropic substances; tobacco; alcohol and alcohol products; ozone-depleting substances and products; and works of art and antiquities that are of significant artistic, historical, scientific, or other value.
Licenses with quotasQuotas are applied on imports of alcohol and alcohol products.
Other nontariff measuresExcise taxes apply to ethyl alcohol (wood and grain), alcohol products, tobacco products, jewelry made of precious stones and metals, crystal products, clothing made from fur and skins, gas-operated arms and firearms, petroleum products, coffee, cocoa, and rugs.
Import taxes and/or tariffsEffective March 12, 2004, five tariff bands apply (zero, 5%, 10%, 12%, and 15%); the average tariff rate is 5.1%. Previously, four tariff bands applied (zero, 5%, 10%, and 17.5%).
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsNo.
Financing requirementsNo.
Documentation requirementsExport contracts for the following are subject to mandatory registration: fish and fish products; grains; soybeans; ethyl alcohol; raw materials for the production of ferrous and nonferrous metals; crude oil; petroleum products; natural gas; electricity; mineral and chemical fertilizers; casein; wood, sawed timber, and lumber materials; raw hides; cotton; tobacco; wool; flax fiber; cobalt and products thereof; rare metals; aluminum oxide; and ferrous and nonferrous metal waste and scrap.
Export licensesExports and reexports of controlled products are subject to mandatory licensing.
The list of controlled products includes raw materials and supplies, equipment and technologies, scientific and technical information, work and services, dual-use products and intellectual property that are included in the National Control List of the Kyrgyz Republic and that could be used in the creation of weapons of mass destruction or means for their delivery, as well as other types of weapons and military hardware. Exports of nonferrous metal waste and scrap are subject to licensing. Other exports that require a permit from the government include wild animals and wild plants.
Without quotasYes.
With quotasQuotas, set annually, apply to alcohol exports.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersNo.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNo.
Restrictions on use of fundsNo.
Capital Transactions
Controls on capital transactionsYes.
Controls on capital and money market instruments
On capital market securitiesControls on securities market instruments are enforced by the National Securities Market Commission (NSMC) under the government of the Kyrgyz Republic, except with respect to the following: (1) debt securities issued by state and local governments; (2) securities issued or guaranteed by the government of the Kyrgyz Republic, by the NBKR, or by local government authorities, with the exception of certificates that are subject to requirements under Article 2 of the Securities Market Law; (3) bills of exchange; and (4) documented payment obligations arising in the course of usual business activities that are valid for a period not exceeding one year.
Shares or other securities of a participating natureAcquisition exceeding 5% of an issuer’s statutory capital or 5% of its stock shares must be reported to the NSMC. Acquisition of a bank’s shares exceeding 5% is subject to approval by the NBKR. Legal entities may not own more than 15% of a bank’s voting shares.
Purchase locally by nonresidentsNonresidents may purchase shares in accordance with regulations. An issuer is required to inform the NSMC of an acquisition by any person exceeding 5% of its statutory capital or exceeding 5% of its stock shares, as well as of all increases of a multiple of 5%. Acquisition of a bank’s shares exceeding 5% is subject to approval by the NBKR.
Sale or issue locally by nonresidentsNonresidents may sell shares in accordance with general regulations provided for by the legislation of the Kyrgyz Republic. The holder is required to inform the NSMC of the sale of shares if the shareholder reduces his or her stake to a level that is a multiple of 5% of the stock shares.
Sale or issue abroad by residentsShares to be offered by a resident for sale and/or circulation abroad must be registered in advance in accordance with legislation.
Bonds or other debt securitiesThe issuance and circulation of corporate bonds are regulated by the NSMC. The regulations governing shares or other securities of a participating nature also apply.
On money market instrumentsExcept for purchase abroad by nonresidents, these transactions are subject to prior reporting to the NSMC.
On collective investment securitiesSecurities invested in joint-stock investment funds and mutual funds are regulated by the Law on Investment Funds. The operations of other funds are not currently regulated by the legislation.
Purchase locally by nonresidentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue locally by nonresidentsThe regulations governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsPrior to their sale or issue abroad, these instruments must be registered with the NSMC.
Controls on derivatives and other instrumentsIn the absence of a market in these instruments, they are not currently regulated.
Controls on credit operations
Commercial creditsThere are no controls on these transactions; however, all economic entities must report commercial (trade) credits received and issued to statistical agencies. The NBKR licenses lending activities of financial institutions.
Financial creditsThe MOF is responsible for the management of official external debt. Private loans with a maturity of more than 180 days received by residents from nonresidents must be reported to the NBKR for statistical purposes.
To residents from nonresidentsThe MOF monitors external government debt. The NBKR maintains records on private external debt.
Guarantees, seureties, and financial backup facilities
By residents to nonresidentsGuarantees provided by the Kyrgyz Republic government must be registered with the MOF.
Controls on direct investment
Inward direct investmentAll direct investment enterprises must be registered with the Ministry of Justice and statistical agencies.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase locally by nonresidentsPurchases are subject to approval by the Ministry of Justice.
Controls on personal capital transactionsNo.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadThese transactions must be reported to the NBKR.
Maintenance of accounts abroadThese transactions must be reported to the NBKR.
Lending to nonresidents (financial or commercial credits)These transactions must be reported to the NBKR.
Lending locally in foreign exchangeThese transactions must be reported to the NBKR.
Purchase of locally issued securities denominated in foreign exchangeLocally issued securities must be denominated in local currency. However, the use of foreign currency, or of payment documents in foreign currency, is permitted in certain instances and according to procedures established by legislation.
Investment regulations
Abroad by banksThese transactions must be reported to the NBKR.
In banks by nonresidentsThese transactions must be reported to the NBKR.
Open foreign exchange position limitsLimits are established by the NBKR.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investors
Limits (max.) on investment portfolio held abroadInvestment funds are not permitted to invest, locally or abroad, more than 10% of their total assets in the securities of a single issuer or to hold more than 25% of the securities of a single issuer.
Other controls imposed by securities lawsNo.
Changes During 2004
Arrangements for payments and receiptsJanuary 31. A debt rescheduling agreement was reached with Pakistan.
April 26. A debt rescheduling agreement was reached with India.
December 31. A debt deferral payment (against principal) agreement was reached with Kuwait.
December 31. Debt consolidation and restructuring agreements were reached with all creditor countries.
Imports and import paymentsFebruary 24. The requirement of customs stamps and mandatory customs labeling for imported medicine was revoked.
March 12. The tariff structure was changed to five bands (zero, 5%, 10%, 12%, and 15%) from four bands (zero, 5%, 10%, and 17.5%).

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