The accession of Kyrgyzstan to the EEU has led to the growth...

The accession of Kyrgyzstan to the EEU has led to the growth of remittances into the country

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Employment preference for residents of this state helped to increase the financial flows from Russia

Photo: TASS/Sergei Bobylev

After accession of Kyrgyzstan to the Eurasian economic Union (EAEU), which was held a year ago, the flow of remittances from Russia to this country began to recover. Moreover, this trend has not affected the weakening of the ruble and strengthening of the Kyrgyz currency — som. This writes the chief economist at the Eurasian development Bank Yaroslav Lissovolik in the Preface to the next macroentry “Eurasian trajectory of economic recovery”, prepared by the group chief economist of the EDB (Eurasian development Bank).

Money transfers of labor migrants in 2010-2014 was about 25% of GDP of Kyrgyzstan. However, at the end of 2014 has been the collapse of the ruble, resulting in the flow of remittances from Russia decreased. According to the Central Bank, remittances in the second quarter of 2016 amounted to $487 million, with an average transfer amount of $233 compared with $557 million and $330 respectively in the second quarter of pre-crisis 2014.

As said Yaroslav Lissovolik, in II quarter of 2016, the dynamics of remittances in dollar terms came in the positive zone.

— The main contribution to the recovery of the remittances in the region contributes to Kyrgyzstan, where remittances increased by 22% year-on-year in the second quarter of 2016, largely due to preferential conditions for labour migrants from this country in the EEU, explains Lissovolik.

After joining the economic Union of the people of Kyrgyzstan received preferential treatment when applying for a job in countries belonging to the EAEC, including in Russia. Managing partner Kirikov Group Daniil Kirikov explains that the total number of migrants from Kyrgyzstan today is about 545 thousand (in may of 2015, this indicator was equal to 501 thousand). Any quota for this Republic to date do not exist. Of preferences for labour migrants from Kyrgyzstan — an opportunity not to buy the patent, giving the right to work in Russia, they are also exempt from taking examinations on knowledge of Russian language, history and laws of our country.

— Citizens of Kyrgyzstan can in any number of legally present in the labour market. Russia recognized all the diplomas of specialists from this country, with the exception of doctors, lawyers, teachers and pharmacists. Finally, migrants and members of their families have the right to emergency health care regardless of whether they have insurance policy and also compensation for damages caused in connection with this cost at the expense of the budget of Russia, — added the lawyer.

As positive trends in the integration processes within the EEU Yaroslav Lissovolik also noted the growth of exports to Russia from neighboring countries.

In some cases, including Belarus and Armenia, the acceleration of export growth in part could be due to the depreciation of exchange rates of national currencies, but the example of Kyrgyzstan, which showed the increment of exports to the markets of the EAEU, despite the strengthening of the som relative to the ruble, suggests that a role could play integration — does not exclude the economist.

As for Armenia, the growth of exports to Russia for the first half amounted to 87,4%. This index is the economist of the EDB explains how the policy of the government to stimulate exports and the positive effect of integration within the EEU by a decline in food supply and agricultural products to Russia from third countries. The main group of products for the growth were food products and agricultural raw materials as well as precious stones, metals and products from them.

EDB noted the role of regional factors in the stabilization and recovery of economic growth of the countries of the EEU. Thus, in the case of Armenia, a certain role could be played by increased competitiveness of Armenian products due to the depreciation of the exchange rate. However, like Armenia and Kyrgyzstan, the implementation of import growth to Russia in these conditions have greatly facilitated the preferential trade regime. While in some cases export growth was observed, despite the strengthening of the currencies of the countries of the EEU in relation to the Russian ruble.