Bishkek, Kyrgyz Republic, May 28, 2008
—IFC, a member of the World Bank Group, has helped the government of the Kyrgyz Republic develop an amendment to the country’s tax code that will help expand the leasing sector. The provision was signed into law earlier this month by the president.
The law will benefit local businesses, particularly those in the agricultural sector. Implementing effective legislation will help increase foreign and local investments in the leasing sector and expand access to finance for small and medium enterprises. This will allow them to purchase the equipment they need to operate more efficiently.
“The new law is a significant step forward. We can now offer our clients leasing products in addition to bank loans, providing entrepreneurs with choices that best fit their business needs,” said Gulnara Shamshieva, General Manager of Micro Credit Agency Bai Tushum Financial Fund, a leading microlending institution in the Kyrgyz Republic.
“Expanding the leasing sector will help create jobs, increase GDP, and bolster state tax revenues. The sector has not yet realized its full potential in the Kyrgyz Republic due to provisions in the tax code that regulated VAT and withholding taxes. The new law addresses these challenges,” said Cholpon Kokumova, IFC Operations Officer.
IFC is working with the governments of Azerbaijan, Kazakhstan, the Kyrgyz Republic, Tajikistan, and Uzbekistan as well as the local private sector to expand leasing for smaller businesses. This effort is part of the IFC Azerbaijan - Central Asia Leasing Facility Project, a $30 million credit facility and a three-year advisory services program. It helps SMEs improve their risk management and internal control, assets and liabilities management, human resource management, credit analysis, leasing operations, and management information systems.
The initiative has shown significant results. As of December 2007, participating financial institutions have engaged in leasing transactions worth more than $93 million. IFC was a catalyst for outside investment, attracting $25 million from clients.
The IFC Azerbaijan - Central Asia Leasing Facility Project is supported with funds from the Government of Switzerland.
About IFC
IFC, a member of the World Bank Group, fosters sustainable economic growth in developing countries by financing private sector investment, mobilizing private capital in local and international financial markets, and providing advisory and risk mitigation services to businesses and governments. IFC's vision is that people should have the opportunity to escape poverty and improve their lives. In FY07, IFC committed $8.2 billion and mobilized an additional $3.9 billion through syndications and structured finance for 299 investments in 69 developing countries. IFC also provided advisory services in 97 countries. For more information, visit
www.ifc.org
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About SECO
The State Secretariat for Economic Affairs is the Swiss Confederation's competence center for all the core issues related to economic policy. Its aim is to create basic regulatory and economic policy conditions to enable business to flourish and benefit all. SECO also represents Switzerland in the large multilateral trade organizations and international negotiations, and is involved in efforts to reduce poverty and help developing countries with transition economies build sustainable democratic societies and viable market economies. Each year, Switzerland spends about 1.9 billion francs on development cooperation and transition assistance to countries.
