Quarterly Report: Economic Reforms to Enhance Competitiveness

The project aimed to enhance the competitiveness of the Kyrgyz economy through economic reforms. The project was implemented under contract number EEM-I-00-07-00005 from April to June 2010. Significant issues affecting the implementation of the project included the country's leadership change and overall instability following the political events of April 7-8, 2010. The working group established for validating property data for the Kyrgyz Property Tax System (KPTS) delayed its activities, and the planned survey to measure taxpayer awareness was postponed. However, the new State Tax Service Chairman was supportive of the project initiatives, and progress was made in their development. The project received letters from the project counterparts, including the State Tax Service, Ministry of Finance, and National Bank of the Kyrgyz Republic, requesting technical and in-kind assistance. These requests were outside the project's current scope and were forwarded to USAID/Kyrgyzstan and USAID/CAR for further consideration. The project team met with various counterparts and donors, including the Acting Minister of Finance, Deputy Chairman of the Interim Government, and the Acting Chairman of the State Tax Service. The meetings focused on discussing the project's activities, providing technical assistance, and addressing the challenges faced by the project. The project's activities in the Public Accounting and Audit area included providing technical assistance on public sector accounting reform, developing an updated action plan on transition to International Public Sector Accounting Standards (IPSAS), and presenting the final draft of the Accounting Regulation to the Ministry of Finance. The project also continued the certified accounting practitioner course for staff members of the Financial Reporting and Internal Audit Methodology Department of the Ministry of Finance. In the Revenue Analysis area, the project prepared a report on current issues in revenue policy, which highlighted the increase in consumption tax burden on the poorest sector of society following the introduction of the new tax code. The project also provided written recommendations to bring tax policy under the Ministry of Finance, abolish the sales tax, and strengthen the operational independence of the State Tax Service. The project collected data on actual and forecasted revenue for 2010 and reviewed proposed amendments to the Tax Code from a legal perspective. The project provided recommendations to the State Tax Service, Ministry of Economic Regulation, and Ministry of Finance on these matters. The project's activities were focused on enhancing the competitiveness of the Kyrgyz economy through economic reforms. The project's recommendations and technical assistance aimed to improve the tax policy, revenue collection, and public accounting and audit systems in the country.