THE REBIRTH OF RUSSIAN AID TO KYRGYZSTAN
On November 16, 2012, Russian Prime Minister Dmitry Medvedev notified Kyrgyzstan’s President Almazbek Atambaev of the allocation of a grant in the amount of US$ 25 million to Kyrgyzstan. According to Kyrgyzstan’s Prime Minister Jantoro Satybaldiev, the Russian grant will be exclusively used to support the state budget. The Prime Minister said that the grant is expected to be transferred by the end of 2012. On November 20, President Atambaev met with Kyrgyzstan’s Minister of Finance Olga Lavrova to underline the importance of the Russian grant and make sure that all the necessary documentation is prepared in a timely manner in order to secure receipt of the grant by the end of 2012. President Atambaev added that the grant will help the government of Kyrgyzstan to maintain fiscal stability in the country.
During a Parliamentary Committee on Foreign Affairs meeting, Lavrova stated that the use of grant money will have to be reported to the Russian Ministry of Finance, and that internal procedures will decide whether the grant money will be included in the budget for 2012 or 2013. After the grant is allocated, Kyrgyzstan will have to present a precise report to the Russian Ministry of Finance on the effectiveness of the expenditures.
According to the World Bank’s office in Bishkek, Kyrgyzstan has the largest budget deficit among the CIS countries. The World Bank’s Country Director, Alexander Kramer stated that the Kyrgyzstan’s deficit amounts to 6.2 percent of the country’s GDP. Earlier this year, the Ministry of Finance had to cut 72 million soms (over US$ 1.5 million) from the budget of the Ministry of Culture. The cut not only outraged the ministry and certain MPs but most importantly citizens who insist on a greater allocation of funds for cultural events.
One of the reasons of the deficit is delays in receiving dividend incomes into the state budget. On November 19 during the meeting of the Parliamentary Committee on Budget and Finance, Lavrova stated that the forecast for income dividends for 2012 amounts to 2 billion soms (just over US$ 42 million). Furthermore, Lavrova informed the MPs that 500 million soms (a little over US$ 1 million) are yet to be received from the OJSC “Power Plants.”
The US$ 25 million grant is not the first and certainly not the last package of financial aid that Kyrgyzstan is to receive from Russia. In February 2009, then President Kurmanbek Bakiev convinced Moscow to write off a US$ 180 million debt. Interestingly, this came at a time when ex-President Bakiev, during an official visit to Moscow, stated that he would insist on the closure of the U.S. Manas Airbase in Kyrgyzstan. In 2010, the Russian Federation provided Kyrgyzstan with financial aid in the amount of US$ 50 million of which US$ 20 million constituted a grant and a US$ 30 million a concessional loan. The financial aid was to be used for stabilizing the economic situation in the country after the overthrow of President Bakiev. Then Russian Prime Minister Vladimir Putin stated that the sum could be increased if necessary.
In the past couple of years, Russia has significantly increased its spending on foreign aid. The so-called “reincarnation” of Russian foreign assistance is certainly related to Russia’s image, especially among CIS countries. In addition, Russia utilizes subsidies to foreign governments as a means for leverage in the competition it faces from other regional players such as the U.S. and China, especially in Central Asia, a region where Russia has always had not only a presence but also swayed great influence. In addition to the financial aid it receives from Russia, Kyrgyzstan this summer received the first part of a Russian military aid package at a total value of US$ 16 million. Since Kyrgyzstan’s new government was installed, Russia has paid increasing attention to the country, especially in light of President Atambaev’s changing positions on issue of renewing the U.S. lease of the Manas airbase beyond 2014.
