The Russian government has approved the draft intergovernmental agreement on regulating Kyrgyzstan's indebtedness to Russia. According to the draft, a total of USD 59.34 million subject to regulation will be repaid in a period of 15 years with a grace period of two years. An interest rate of 5% APR will be imposed on the sum to be repaid with an interval of six months and will be paid in US dollar terms. Part of the debt will be converted into 25 notes by the Ministry of Finance of Kyrgyzstan and transferred to Russia.

Kyrgyz Prime Minister Kurmanbek Bakiev at a press conference last week confirmed media reports on the discovery of several oil deposits in the republic, state-run Kabar news agency reported. Canada's Cadima Petroleum led the exploration effort, which was conducted near the town of Maili Su (Jalalabad region). Cadima General Manager Alexander Bekker warned that it is too early to jump to any conclusions about the commercial prospects of the field, given that only three wells have been drilled thus far. Cadima plans to continue drilling if it can secure financing from an Israeli source. The quality of the Maili Su oil has not yet been determined. Kyrgyz Institute of Geology Director Apas Bakirov believes that other areas of the republic are also promising, particularly the At-Bashin district (Narynsk region), which is estimated to contain 10 million tons. Oil deposits may also lie near the republic's border with China, Bakirov says. The Kyrgyz government has allocated nearly USD 1 MM this year to explore the republic's oil potential, Prime Minister Bakiev said.

The World Bank will extend a 40-year, USD 15 MM credit to the Kyrgyz government to make improvements to the state healthcare system. The aid is intended first of all to fund subsidies for medicine for low-income citizens. In addition, the money will be used to set up small medical clinics in villages. The United Kingdom's international development department has also allocated a USD 3 MM grant for similar purposes. "Reform of the Kyrgyz healthcare system is an example for other countries of Central Asia and the CIS," World Bank development department head Annette Dixon told Kyrgyz-Press.

A Kazakhstani-Cypriote joint venture has launched construction of a cotton processing and cottonseed oil production plant in Batken region of southern Kyrgyz Republic. The plant will have the capacity to process 21 tons of raw cotton per shift using modern European equipment. Cotton is grown on over 800 hectare of Batken region land. This year's raw cotton yield is expected to be 2.5 times larger than last year's and will arrive in time for the projected September launch of the new plant.

The Kyrgyz National Bank will no longer give ailing domestic banks extensions to come into compliance with the tough new National Bank licensing requirements, central bank Chairman Ulan Sarbanov told state-run Khabar news agency. Five commercial banks in the republic currently face serious capitalisation issues, Sarbanov said, but noted that "those banks' problems did not arise yesterday, but a pretty long time ago." Henceforth, ailing banks will be given permits of five to seven days to come into compliance with National Bank requirements. "If they manage to work within this timeframe and meet requirements they will be given a chance to continue operating. Otherwise, they could lose their license and be liquidated," Sarbanov warned.