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Kyrgyzstan is a poor, mountainous country with a predominantly agricultural economy. Cotton, tobacco, wool, and meat are the main agricultural products, although only tobacco and cotton are exported in any quantity. Industrial exports include gold, mercury, uranium, and natural gas and electricity. Kyrgyzstan has been fairly progressive in carrying out market reforms, such as an improved regulatory system and land reform. Kyrgyzstan was the first CIS country to be accepted into the World Trade Organization. With fits and starts, inflation has been lowered to an estimated 7% in 2001, 2.1% in 2002, and 4.0% in 2003. Much of the government's stock in enterprises has been sold. Drops in production had been severe after the breakup of the Soviet Union in December 1991, but by mid-1995 production began to recover and exports began to increase. Kyrgyzstan has distinguished itself by adopting relatively liberal economic policies. The drop in output at the Kumtor gold mine sparked a 0.5% decline in GDP in 2002, but GDP growth bounced back to 6% in 2003. The government has made steady strides in controlling its substantial fiscal deficit and aims to reduce the deficit to 4.4 percent of GDP in 2004. The government and the international financial institutions have been engaged in a comprehensive medium-term poverty reduction and economic growth strategy. Further restructuring of domestic industry and success in attracting foreign investment are keys to future growth.
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Small machinery, textiles, food processing, cement, shoes, sawn logs, refrigerators, furniture, electric motors, gold, rare earth metals.
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Tobacco, cotton, potatoes, vegetables, grapes, fruits and berries; sheep, goats, cattle, wool.
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- Due to its position as land-locked country and the low level of development, the main objectives of the Kyrgyz foreign policy are to maintain good relations with neighbouring countries, to attract foreign investors and to get active involvement of International Financial Institutions.
- Over the past few years Uzbekistan, Kazakhstan, and Kyrgyzstan have been embroiled in disagreements over unpaid debts and import tariffs. The Central Asian Union (CAU) was established between Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan so as to co-ordinate joint actions in economic reforms and foster economic integration. However, despite regular meetings and summits no real progress has been made to solve bilateral issues such as transit, gas delivery and water supply.
- Kyrgyzstan is a member of the recently created Eurasian Economic Community (EAEC) which also includes Russia, Belarus, Kazakhstan and Tajikistan. However, it is unlikely that this organisation will achieve the substantial integration that its predecessor, the Customs Union, failed to achieve.
- There is also a constant fear that Islamic fundamentalism coming from Afghanistan and Tajikistan could lead to problems in the Ferghana valley, around Osh. The Kyrgyz authorities experience particular difficulty in asserting their control over southern Kyrgyzstan. This weakness was illustrated by the hostage crisis of August-October 1999, in which four Japanese geologists and Kyrgyz Interior Ministry forces commander Major-General Anarbek Shamkeev were taken hostage, presumably by Islamic fundamentalists. In general, Uzbek-speaking fundamentalist fighters from Tajikistan are a major destabilising element in Kyrgyzstan, especially during the Spring. Fighting involving armed groups has been widespread in 1999 and 2000, while serious incidents such as kidnappings have frequently resulted in the death of people. Another dimension of the fundamentalist threat is the fight against drug and arms trafficking with its internal dimension in terms of corruption. The EU takes the view that the government’s legitimate fight against fundamentalist terrorism should not, however, be used as an excuse to crack down on equally legitimate expressions of civil society and political pluralism.
- Apart from being the first member of WTO in Central Asia, the Kyrgyz Republic has good relations with the IMF (which has developed an ESAF programme) and the World Bank (Kyrgyzstan is one of the few countries in the world to be an example for the World Bank).
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1 Som = 100 Tyins
45 Soms ~ 1 USD
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