From a sixth-floor window overlooking Bishkek’s “golden quarter” — a district touted as holding the city’s prime real estate — a panorama of slow-moving and stalled construction projects greets the eye.
 
The dormant sites are casualties of Kyrgyzstan’s national currency, which has lost nearly a third of its value in the space of a year. The som slipped from 59 to the dollar on January 1, 2015, to around 76 to the dollar at the end of the year, according to the Kyrgyz national bank’s official rate.
 
With other sectors of the economy also feeling the strain, the government is mulling heavy-handed anti-crisis measures that analysts say will do more harm than good.
 
According to a recent report citing the State Inspectorate for Ecological and Technical Safety, there are over 40 frozen construction projects in Bishkek. Construction companies are unwilling or unable to finish building as long as their buyers cannot stump up the cash for apartments or office space.
 
Sales of residential buildings in the capital fell by one-third over the first three quarters of 2015 compared to the same period the previous year, as sellers wait hopefully for the market to rebound, the government’s Department of Inventory announced. Companies faced with defaults and costlier imports are shelving projects altogether and laying off workers.
 
One business lobby group, the Association of Young Entrepreneurs, estimates there are only a third of the number of jobs in the sector since the currency crisis began. “Until the value [of the som] against the dollar normalizes, the construction market will be in a state of stagnation,” Cholponbek Temirbekov, a senior sales representative at the Khan construction company in Bishkek, told Eurasianet.org.
 
The appreciating dollar makes materials from even the most affordable supplier problematic to afford. “It is more difficult to trade now with China and Turkey,” said a spokesman for the Avant Garde Style company in a phone call with EurasiaNet.org.
 
“We have had to cut our workforce,” said the spokesman, who only provided his first name, Nurbek. “But there are plusses too. Because of the crisis, some weaker firms are exiting the market, leaving only the more stable firms behind.”
 
While representatives of relatively sizable companies Khan and Avant Garde Style believe they can weather a prolonged economic crisis, the government is less sanguine. Job losses are looming not just in construction, but in all sectors exposed to the vicissitudes of currency volatility.
 
A store attendant at a once-popular outlet in the “golden quarter” selling wines from Austria said there were no plans to import more once their slow-selling stock disappears. “If one bottle of wine used to cost 1,900 som, it might cost nearly 2,500 soms now with depreciation. Psychologically, not even rich people in Bishkek will pay that much for a bottle of red wine,” said the attendant, who asked not to be named.
 
Alarmed by signals from the market, the Economy Ministry has announced plans for import substitution, while the national bank has announced measures for what it terms “de-dollarization.”
 
The measures were agreed on by deputies at a December 10 session of parliament. They include the suspension of foreign currency loans to individuals, and a plan to ensure that at least half of all deposits in the country are held in soms. This would be achieved by cutting accruable interest on foreign currency deposits to nil.
 
Prime Minister Temir Sariyev said at the beginning of December that all property transactions should soon take place in the battered national currency, although he furnished no details.
 
In a widely circulated opinion piece on the K-News website, economic expert Daniyar Aitman offered arguments as to why the measures could prove self-defeating. “In circumstances where the [Kyrgyz] som depreciates by 20-30 percent annually, it is naive to expect that investors transfer their funds from dollar deposits to soms due to lower interest rates,” Aitman wrote.
 
The share of dollar deposits has risen from 51 percent to 68 percent in the last two years alone, Aitman said. “Sloppy, administrative and command responses to dollarized capital will simply lead to it exiting the country,” Aitman said.
 
If the currency and credit market is too severely restricted, it is likely to be driven underground instead. A buoyant black market already exists online.
 
One trader, who goes just by the name Maria, uses a local Internet forum to advertise dollar loans at 10 percent interest, which is around half the rate offered by banks.
 
“People will not want to borrow money in soms. They want dollars in their hands, even if they do not know how to pay them back,” Maria told EurasiaNet.org.
 
Illustrating her point, Maria said she had recently come into possession of one of Bishkek’s trademark minibuses, which she claimed after a debtor failed to keep up with his dues. “I fell into the public transport business accidentally,” she laughed. “It is not a bad business to be in because the demand is always there. The only problem is your customers pay in soms.”
 
Even for reluctant loan sharks like Maria, prospects are not good enough to dispel dream of emigration. If she can sell her apartment, Maria said she might like to try and go to Canada. “But the offers people make are ridiculously low. The part of society that still has access to real money is getting smaller,” she told EurasiaNet.org.