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 3.6%

EBRD forecast for Kyrgyz Republic Real GDP Growth in 2020 3.6%

Growth in the Kyrgyz Republic slowed to 3.5 per cent in 2018 from 4.7 per cent in 2017 as industrial production, in particular mining, expanded at a lower rate. Excluding the Kumtor gold mine, real GDP increased by the same amount (3.5 per cent) as in the previous year. While export growth virtually stalled in 2018, imports rose by around 9 per cent. Net remittances increased by 5.5 per cent (in US dollar terms) in 2018 and continued to support private consumption, although the growth in remittances was less than in 2017.
Inflation decreased to 0.5 per cent by December 2018 from an average 3.2 per cent in 2017 and turned negative in February 2019 due to falling food prices. The low inflation rate allowed the central bank to cut its policy rate by 25 basis points to 4.5 per cent in February 2019. The exchange rate remained broadly stable in 2018 as the central bank intervened to smooth excessive fluctuations and was a net seller of foreign exchange.
Exports from the Kumtor gold mine, more evenly distributed over the year than in 2018, and private consumption, supported by further increases in real wages and remittances, are expected to be major contributors to economic growth in the short term. The scope for fiscal expansion is, by contrast, very limited. Real GDP is projected to grow by 3.6 per cent both in 2019 and in 2020.

Kyrgyz Republic in the EBRD’s 2018-19 Transition Report