Kyrgyz Republic overview

Urban scene

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.

EBRD forecast for Kyrgyz Republic Real GDP Growth in 2019 4.3%

EBRD forecast for Kyrgyz Republic Real GDP Growth in 2020 3.7%

GDP growth reached 6.1 per cent year on year in the first three quarters of 2019, significantly up from 3.5 per cent in 2018, reflecting strong gains in mining and manufacturing and the low base effect. Excluding the Kumtor gold mine, GDP growth in the first three quarters of 2019 was 3.2 per cent year on year, slightly higher compared with same period of 2018, when the economy grew by 2.8 per cent. Growth was supported by an acceleration in fixed investment growth (6.8 per cent in the first three quarters of 2019 from 0.8 per cent a year earlier). Exports increased by 11 per cent in US dollar terms in the first eight months of 2019, mainly due to higher levels of gold shipments, while imports declined by 9 per cent and remittance inflows weakened by 12 per cent year on year. Credit continued to expand at a high pace (up 15 per cent year on year in September 2019). Annual inflation nevertheless remained low in September 2019 at 2.3 per cent, significantly below the target band of 5-7 per cent. The low inflationary environment prompted the central bank to cut the policy rate twice in 2019, by 25 basis points each time – in February and May – to 4.50 per cent and 4.25 per cent, respectively. The exchange rate remained stable in nominal terms in 2018 and 2019 but continued to appreciate in real effective terms. GDP growth is expected to reach 4.3 per cent in 2019, driven by increased gold production. In 2020, economic growth is projected to ease to 3.7 per cent due to slower gains in mining. Public investment and private consumption are expected to support growth in the short term.

 

Kyrgyz Republic in the EBRD’s 2019-20 Transition Report