In the Kyrgyz republic we focus on:
Fostering sustainable growth by strengthening regional cross-border linkages: As a landlocked economy with a limited domestic market, the Kyrgyz Republic would benefit greatly from deeper regional integration, given its important energy export potential, as well as good regional trade and transit position. In that context, the Bank will aim to help facilitate economic and trade cooperation and integration with the region, by supporting rehabilitation of critical infrastructure, strengthening the exporting sector including through access to finance and advisory, as well as supporting cross-border investments and regional cooperation projects.
Enabling SMEs to scale-up and bolster competitiveness: Outside the extractive sector, the economy is dominated by SMEs, with few mid-sized corporates in existence. While deeper regional trade links create opportunities for the best local firms, stronger operating models and core competencies will be needed to better compete. The Bank will thus support competitiveness and sustainable growth of SMEs with viable business models through investment and advisory, promoting in particular skills transfer and operational efficiency improvements, and seek to strengthen the financial sector to facilitate access to finance for SMEs, in particular in local currency. The Bank will also step up its efforts of improving the business environment through policy dialogue.
Promoting sustainability of public utilities through commercialisation and private sector participation: To address underinvestment, deficient regulatory environment, weak core competencies, poor financial and operational performance, the Bank will continue to support municipal utilities, where it has a recognized expertise and delivery model in improving operators’ financial condition, operating practices and governance, and seek to support sustainability of power sector by rehabilitating assets and developing a more attractive institutional framework for private investment.
In addition, the Bank will seek to support through the above priorities the reduction of regional economic disparities, by increasing its outreach to less developed rural areas, in particular in the southern regions, and addressing inclusion gaps in relation to gender and youth across sectors.
The EBRD’s latest Kyrgyz Republic strategy was adopted on 25 February 2015
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EBRD forecast for Kyrgyz Republic Real GDP Growth in 2015 3.0%
EBRD forecast for Kyrgyz Republic Real GDP Growth in 2016 3.1%
GDP growth in the Kyrgyz Republic is expected to decline to 3.0 per cent in 2015 from 3.6 per cent in 2014. The slowdown reflects sharply lower remittances from Russia and more difficult export environment due to recession, depreciation of the Russian rouble and sharply slower growth in Kazakhstan, the country’s main trading partner and a source of remittances. Increased investment carried out using financing provided by Russia and Kazakhstan as part of the accession to the Eurasian Economic Union will help partially mitigate negative impact of external factors. Sharply lower oil prices are also expected to provide a boost to consumption and growth, since the country is a significant net oil/petroleum importer. However, lack of permanent solution to the issues surrounding the Kumtor gold mine remains material downside risk to growth. The som has depreciated significantly in 2014 and 2015, notwithstanding the National Bank’s heavy interventions. However, international reserves remain comparatively high. Inflation is expected to remain elevated at around 10 per cent in 2015 reflecting the exchange rate pass through. In 2016, growth is expected to remain subdued, projected at 3.1 per cent, and there are likely to be increasing fiscal and social pressures, reflecting legacy from lower remittances and returning migrants in 2015, and negative effects of continued recession in Russia and sluggish growth in Kazakhstan in 2016.