Further Budget Change Could be Destabilising

Plans to change the way the Kyrgyz government manages the budget are politically driven and could destabilise the economy, NBCentralAsia analysts argue.



On August 29, the government approved a resolution to shift the budget management system next year from a two-tier to a three-tier system, where central government issues funding to the provincial administrations which then pass it down to the district level. The two-tier system – dropping the provincial level – was only just introduced this year, the aim being to streamline local government reforms.



Parliament must support the new resolution before it can come into effect, and member of parliament Kanybek Imanaliev explained that the outcome of that vote is uncertain.



NBCentralAsia analysts suggest that the authorities want to restore provincial administration’s control over funds filtering down to the district level so as to boost the support they get from this middle level of government ahead of a parliamentary election in 2009.



Opposition member of parliament Avazbek Momunkulov notes that when Kyrgyzstan shifted to the two-tier system, the governors who head provincial administrations had started grumbling about losing control over state funds. Their unhappiness was a matter of concern to the country’s leadership, he said.



“Parliamentary and presidential elections are approaching. They [the current leadership] won’t get in again unless they are backed by the resources of the state, and local government is a major player here,” said Momunkulov.



President Kurmanbek Bakiev has urged parliamentarians to maintain political stability in the provinces, and as former deputy Orozbek Duysheyev points out, that will take “strong local government with financial backing”.



Imanaliev is concerned that chopping and changing the way the budget is administered could destabilise the economy, and the government would do well to focus on reforming taxation policy before taking a decision.



Sapar Orozbakov, the director of the Centre for Economic Analysis in Bishkek, says the previous two-tier system was brought in too hastily, and this latest transition also presents dangers. In short, the government is ill-prepared for finding a sensible way to manage its budget, he said.



(NBCentralAsia draws comment and analysis from a broad range of political observers across the region.)