Kyrgyzstan implements new budget strategy

BISHKEK – Kyrgyzstan’s Ministry of Finance is working to modernise its budget management, reducing government spending and allocating funds more efficiently.

The 2013 budget is being drafted in accordance with the Budget Code that is part of the Stability and Decent Life programme approved by the government January 25, according to Finance Minister Akylbek Zhaparov.

“The new approach to the allocation of budgetary funds will include full transparency of government spending and a reduction in funding for education and social welfare,” he said. “At the moment, public funds are being managed inefficiently, as the state has taken on too many duties in social protection.”

The 100 billion KGS (US $2.1 billion) 2012 state budget represented a several-fold increase over the budget of a few years earlier, he said, “But the people are still dissatisfied with their lives, and they continue to complain about lack of money. It is time to radically revise how we manage our state budget, so that the Kyrgyz can finally feel an improvement in their quality of life.”

Thus, he said, authorities will subject benefit recipients to means-testing and will better monitor fund allocations, to make sure they get to their intended recipients.

Education and healthcare spending

The Kyrgyz budget allocates 18 billion KGS (US $380m) to education annually, but “the return is poor” and a new approach is needed, he said.

“First, we need to centralise the schools. In provincial areas there are schools with only five or six pupils. These schools should be combined with bigger ones,” Zhaparov said.

“At the moment, schools with only a few students and schools with 500 students receive equal amounts of state funding,” he said, adding that allocating funds on a per-student basis is being considered.

The Education Ministry would not comment to Central Asia Online about the state of the educational system or the proposed budgetary changes.

Plans are also in place to introduce private health insurance as a new way to fund healthcare needs, Zhaparov said, adding the government will introduce the system in 20 pilot hospitals by the end of the year.

New guidelines

All ministries and departments will follow the new budget management principles, said Bakyt Baketayev, head of the Finance Ministry Administration for Financial Oversight and Resistance to Corruption.

“This year, every ministry and department should analyse and calculate how much money it has spent and how much it needs and submit a report to the Ministry of Finance for approval,” Baketayev said.

“We have launched a few websites where people can monitor the budgets of the ministries and departments and of every village council,” he said of making the process more transparent.

Efficient management also means reducing funding for cars and other privileges officials enjoy, he said.

“An official should be as modest as a Tibetan monk and remember that he is supposed to have only one car, a certain salary, and no privileges,” Baketayev continued.

Reaction to budget changes

It’s premature to drastically change the way money is spent on education, healthcare and social welfare programmes because the people aren’t ready for such changes, said Anara Dautaliyeva, a member of the Taza Tabigat NGO, a civil society organisation that advises the government on spending.

The government heeded that advice to a degree, opting to wait before enacting a controversial policy requiring schools to finance themselves by collecting tuition. In explaining that decision, Finance Ministry officials said it’s more important to cut waste first.

Members of parliament agree with most of the proposed cutbacks, but many opposed the tuition plan.

“No one can guarantee that, if this process continues, it will not lead to the school being incorporated and privatised,” said MP Kanybek Osmonaliyev. “On top of that, no one can guarantee that tomorrow, influential principals of other schools will not receive the same status. And then, in 5-7 years, it will be virtually impossible for gifted children from poor families or even middle-class families to get into these schools.”

“We, the MPs of Kyrgyzstan, demand a halt to the process of moving elementary and secondary schools to self-financing and (will debate it) in parliament,” said MP Assia Sysykbaeva.