A Central Asian country of incredible natural beauty and proud nomadic traditions, most of the territory of present-day Kyrgyzstan was formally annexed to the Russian Empire in 1876. The Kyrgyz staged a major revolt against the Tsarist Empire in 1916 in which almost one-sixth of the Kyrgyz population was killed. Kyrgyzstan became a Soviet republic in 1936 and achieved independence in 1991 when the USSR dissolved. Nationwide demonstrations in the spring of 2005 resulted in the ouster of President Askar AKAEV, who had run the country since 1990. Former Prime Minister Kurmanbek BAKIEV overwhelmingly won the presidential election in the summer of 2005. Over the next few years, he manipulated the parliament to accrue new powers for the presidency. In July 2009, after months of harassment against his opponents and media critics, BAKIEV won reelection in a presidential campaign that the international community deemed flawed. In April 2010, violent protests in Bishkek led to the collapse of the BAKIEV regime and his eventual flight to Minsk, Belarus. His successor, Roza OTUNBAEVA, served as transitional president until Almazbek ATAMBAEV was inaugurated in December 2011, marking the first peaceful transfer of presidential power in independent Kyrgyzstan's history. Continuing concerns include: the trajectory of democratization, endemic corruption, poor interethnic relations, border security vulnerabilities, and potential terrorist threats.
Location
Central Asia, west of China, south of Kazakhstan
Natural Resources
abundant hydropower; gold, rare earth metals; locally exploitable coal, oil, and natural gas; other deposits of nepheline, mercury, bismuth, lead, and zinc
Population - distribution
the vast majority of Kyrgyzstanis live in rural areas; densest population settlement is to the north in and around the capital, Bishkek, followed by Osh in the west; the least densely populated area is the east, southeast in the Tien Shan mountains
Kyrgyz (official) 71.4%, Uzbek 14.4%, Russian (official) 9%, other 5.2% (2009 est.)
BISHKEK (capital) 865,000 (2015)
- Conventional long form
- Kyrgyz Republic
- Conventional short form
- Kyrgyzstan
- Local long form
- Kyrgyz Respublikasy
- Local short form
- Kyrgyzstan
- Name
- Bishkek
- Geographic coordinates
- 42 52 N, 74 36 E
- Time difference
- UTC+6 (11 hours ahead of Washington, DC, during Standard Time)
has not submitted an ICJ jurisdiction declaration; non-party state to the ICCt
Kyrgyzstan is a landlocked, mountainous, lower middle income country with an economy dominated by minerals extraction, agriculture, and reliance on remittances from citizens working abroad. Cotton, wool, and meat are the main agricultural products, although only cotton is exported in any quantity. Other exports include gold, mercury, uranium, natural gas, and - in some years - electricity. The country has sought to attract foreign investment to expand its export base, including construction of hydroelectric dams, but a difficult investment climate and an ongoing legal battle with a Canadian firm over the joint ownership structure of the nation’s largest gold mine deter potential investors. Remittances from Kyrgyz migrant workers, predominantly in Russia and Kazakhstan, are equivalent to over one-quarter of Kyrgyzstan’s GDP.
- Inflation
- 0.422%
- External debt stocks
- US$ 7,504,489,000
- Total tax rate (% of commercial profits)
- 29.0%
- Real Interest Rate
- 19.277%
- Manufacturing, value added (% of GDP)
- 16.644%
- Current Account Balance
- US$ -992,598,192
- Labor Force, Total
- 2,627,866
- Employment in Agriculture
- 29.31%
- Employment in Industry
- 20.90%
- Employment in Services
- 49.79%
- Unemployment Rate
- 7.69%
- Imports of goods and services
- US$ 4,909,995,175
- Exports of goods and services
- US$ 2,489,016,026
- Total Merchandise Trade
- 83.40%
- FDI, net inflows
- US$ 1,139,260,400
- Commercial Service Exports
- US$ 846,019,001
cotton, potatoes, vegetables, grapes, fruits and berries; sheep, goats, cattle, wool
small machinery, textiles, food processing, cement, shoes, lumber, refrigerators, furniture, electric motors, gold, rare earth metals
- Commodities
- gold, cotton, wool, garments, meat; mercury, uranium, electricity; machinery; shoes
- Partners
- Switzerland 26.1%, Uzbekistan 22.6%, Kazakhstan 20.8%, UAE 4.9%, Turkey 4.5%, Afghanistan 4.5%, Russia 4.2% (2015)
- Commodities
- oil and gas, machinery and equipment, chemicals, foodstuffs
- Partners
- China 56.6%, Russia 17.2%, Kazakhstan 10% (2015)
- Country Risk Rating
- D
- A high-risk political and economic situation and an often very difficult business environment can have a very significant impact on corporate payment behavior. Corporate default probability is very high.
- Business Climate Rating
- D
- The business environment is very difficult. Corporate financial information is rarely available and when available usually unreliable. The legal system makes debt collection very unpredictable. The institutional framework has very serious weaknesses. Intercompany transactions can thus be very difficult to manage in the highly risky environments rated D.
- Substantial gold resources
- Vast hydroelectric potential
- Supported by bilateral and multilateral donors
- Pivotal strategic position between Asia and the CIS
- Member of the Eurasian Economic Union since 2015 (Russia, Belarus, Kazakhstan, and Armenia)
- Economy poorly diversified and still dependent on gold and remittances
- Landlocked country with very high energy dependency
- Difficult business climate
- Fragile political situation, regional and inter-ethnic tensions
- Difficult relations with its neighbors (water management, borders)
After achieving growth of nearly 11% in 2013, the Kyrgyz economy continued slowing in 2016 and is expected to settle at a moderate level in 2017. Kyrgyzstan is struggling as the other economies in the region and, more specifically, in Russia and Kazakhstan, its key trading partners, struggle. Household consumption is suffering as a result of the situations in its neighbouring countries, with remittances from Kyrgyz workers in Russia (-25% in 2015), accounting for 25.7% of GDP, in decline. On top of this, the slowness of the recovery of international gold prices, the country’s leading export, is also a drag on the rate of growth. The standoff in the dispute concerning the operation of the Kumtor mine – the country’s biggest mine, accounting for 10% of GDP and 25% of industrial output – between the Canadian company Centerra and the government, threatens the future of production (-36% in the first six months of 2016) and growth in this critical sector. The gradual improvement in these external pressures should thus make it possible for growth to stabilise in 2017.
The actions of the central bank, the National Bank of the Kyrgyz Republic (NBKR), together with the weakness of domestic demand, the stabilisation of the som and above all, the fall in food prices, led to a drop in inflation in 2016. Higher food prices are likely however to push inflation back up steeply in 2017 with non-food inflation already in the central bank’s 5% - 7% target range.
There should be an improvement in the budget deficit in 2017 thanks specifically to the removal of a number of tax exemptions, including VAT on flour. Efforts to reduce spending also need to be applied but with the approach of the Presidential elections in 2017, non-budgeted expenditure cannot be ruled out. Given the slow rate of growth and the critical level reached by the public debt, fiscal consolidation is a key challenge.
The current account deficit, which widened in 2016, should stabilise at a very high level in 2017. The balance of trade deficit is likely to remain substantial taking into account the fairly unpromising forecasts concerning the price of gold, Kyrgyzstan’s leading export. The outlook for remittances from workers abroad and Russian FDI is unlikely to improve in 2017. These will continue to suffer from the slowness of any recovery in the Russian economy. The scale of the deficit, the roots of which lie in the extent of the country’s external dependence for its energy and food needs, makes the economy vulnerable to external shocks. Its currency reserves, equal to 4.6 months of future imports of goods and services, are not large enough to reduce this risk.
The government, in power since the parliamentary elections of October 2015, resigned on 26 October 2016 after the Social Democratic (SDPK) party of the President Almazbek Atambayev left the coalition. This followed the refusal by the Ata Meken party, which was in the government coalition, to support constitutional reforms, accusing Mr. Atambayev of trying to extend his power over the country beyond the end of his term of office at the end of 2017. Two weeks later, however, the PSDK found two new coalition partners and the Prime Minister was re-elected to lead the government. His appointment came after the ruling by the Supreme Court in favour of a referendum on the controversial constitutional reforms. These reforms would conflict with the provisions of the 2010 Constitution stipulating that constitutional amendments cannot come into effect before 01 September 2020. These reforms, which include increasing the powers of the government and of the parliament, are being seen as a way for President Atambayev to maintain his influence over parliament when he reaches the end of his term of office as President at the end of 2017. The constitutional reform is an illustration of the fragile nature of this evolving democracy and its persistent political instability. With this political instability, the level of corruption and the weakness of regulation, the business climate remains poor.
In addition, in the border areas, there are ethnic frictions between the Tajik, Uzbek and Kyrgyz populations and there is a heightened risk of Islamic terrorist activity. The unclaimed attack on the Chinese embassy in Bishkek at the end of August 2016 highlights the security risks.
Its diplomatic relations have included moves to establish closer links with Russia through membership of the Eurasian Economic Union in 2015. Whilst this agreement helps to protect its access to the Russian and, in particular, the Kazakh markets, it could be a sign of a loss of political independence relative to Moscow and be an obstacle on its increased cooperation with China, in particular in the development of the “One Belt, One Road” initiative, aimed at rebuilding Eurasian trade routes.