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ECONOMY
Alymbek BIIALIEV
Alymbek Bilaliev, Ph.D. (Econ.), columnist of the newspaper
Respublika, economic advisor to the governor of the Issyk Kul Regional Administration (Issyk Kul, Kyrgyz Republic)
The country’s economy in 2005 was expected to develop in line with the trend characteristic of the previous five years, when the government had traditionally focused on macroeconomic policy, paying less attention to the real sector. Thus, in accordance with Government Decision No. 756 of 13 October, 2004, monetary policy was designed to maintain low inflation (not exceeding 4.6%).
It was assumed that such a rate of inflation would take shape under the combined impact of internal and external factors: an increase in the money supply controlled by the National Bank of the Kyrgyz Republic, the impact of the government’s fiscal measures, adjustment of the rates charged for the services of natural monopolies, seasonal fluctuations in the prices of agricultural products, and also changes in the economic situation in Kyrgyzstan’s trading partners and fluctuations in world prices. The National Bank continued its floating exchange rate policy, which it planned to pursue by means of currency interventions designed to smooth out any sharp exchange rate fluctuations associated with seasonal changes in demand for foreign currency or short-term speculative operations. In annual terms, the exchange rate of the national currency (som, KGS) against the US dollar was projected at 42 soms per dollar.
The government planned that macroeconomic stability would help to achieve GDP growth of 5% (as in previous years). However, a weak point of the government’s plans was that the increase in this basic economic indicator was to have been achieved largely through growth in agriculture and………………
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