Economy of Kyrgyzstan

Economy - overview: Kyrgyzstan is a small, poor, mountainous country with a predominantly agricultural economy. Cotton, wool, and meat are the main agricultural products and exports. Industrial exports include gold, mercury, uranium, and electricity. Kyrgyzstan has been one of the most progressive countries of the former Soviet Union in carrying out market reforms. Following a successful stabilization program, which lowered inflation from 88% in 1994 to 15% for 1997, attention is turning toward stimulating growth. Much of the government's stock in enterprises has been sold. Drops in production had been severe since the breakup of the Soviet Union in December 1991, but by mid-1995 production began to recover and exports began to increase. Pensioners, unemployed workers, and government workers with salary arrears continue to suffer. Foreign assistance played a substantial role in the country's economic turnaround in 1996-97. The government has adopted a series of measures to combat such severe problems as excessive external debt, inflation, inadequate revenue collection, and the spillover from Russia's economic disorders. Kyrgyzstan had moderate growth in 1999 of 3.4% with a similar rate expected for 2000.

Economy - in greater depth:
The economy of Kyrgyzstan was severely affected by the collapse of the Soviet trading block. In 1990, some 98% of Kyrgyz exports went to other parts of the Soviet Union. Thus, the nation's economic performance in the early 1990s was worse than any other former Soviet republic except war-torn Armenia, Azerbaijan, and Tajikistan. While economic performance has improved in the last few years, difficulties remain in securing adequate fiscal revenues and providing an adequate social safety net.

The principal sector of the economy in Kyrgyzstan is agriculture, which contributes about one-third of the GDP and more than one-third of employment. The republic possesses a mountainous terrain, which accommodates livestock rearing, the largest sector within agriculture. The main crops are cotton, hemp, tobacco, vegetables, and fruit. By the early 1990s, the private sector provided between one-third and one-half of some harvests. Wool, leather, and silk also are major products, and much of the industrial sector is devoted to agroprocessing, the most attractive proposition for foreign investors.

The position of the country geographically works to its disadvantage. The region is prone to harsh climatic conditions and is in an earthquake zone. In 1992 there were earthquakes and mudslides, and in 1998 two mudslides also occurred in southern Kyrgyzstan.

With respect to Kyrgyzstan's potential for mining and energy extraction, the Republic is rich in mineral resources but has negligible petroleum and natural gas reserves. Among its reserves are substantial deposits of coal, gold, uranium, antimony, and other rare metals. The main barrier to development has been the inaccessibility of many of the potential resources. The government has actively cultivated foreign cooperation in processing and extracting gold while building up the nation's own reserves in the process. OPIC has recently been involved in the establishment of two joint ventures in Kyrgyzstan with Western gold companies.

Kyrgyzstan's plentiful water resources and mountainous terrain have enabled it to export hydroelectric energy. However, Kyrgyzstan imports petroleum and gas. There are plans to construct a petroleum refinery in Kyrgyzstan. The metallurgy industry is among the most important in Kyrgyzstan, and the government is hopeful of attracting foreign investment in the field.

Kyrgyzstan's principle exports, which go overwhelmingly to other CIS countries, are nonferrous metals and minerals, woolen goods and other agricultural products, electric energy, and certain engineering goods. In turn, the Republic relies on other former Soviet states for petroleum and natural gas, ferrous metals[?], chemicals, most machinery, wood and paper products, some foods, and most construction materials. In 1999, Kyrgyz exports to the U.S. totaled $11.2 million, and imports from the U.S. totaled $54.2 million. Kyrgyzstan exports antimony, mercury, rare-earth metals, and other chemical products to the U.S., and it imports grain, medicine and medical equipment, vegetable oil, paper products, rice, machinery, agricultural equipment, and meat from the U.S.

The Kyrgyzstan Government has reduced expenditures, ended most price subsidies, and introduced a value added tax. Overall, the government appears committed to transferring to a free market economic system by stabilizing the economy and implementing reforms, which will encourage long-term growth. These reforms have led to Kyrgyzstan's accession to the WTO on December 20, 1998.

GDP: purchasing power parity - $10.3 billion (1999 est.)

GDP - real growth rate: 3.4% (1999 est.)

GDP - per capita: purchasing power parity - $2,300 (1999 est.)

GDP - composition by sector:
agriculture: 45%
industry: 20%
services: 35% (1999 est.)

Population below poverty line: 40% (1993 est.)

Household income or consumption by percentage share:
lowest 10%: 2.7%
highest 10%: 26.2% (1993)

Inflation rate (consumer prices): 37% (1999 est.)

Labor force: 1.7 million

Labor force - by occupation: agriculture and forestry 55%, industry 15%, services 30% (1999 est.)

Unemployment rate: 6% (1998 est.)

Budget:
revenues: $225 million
expenditures: $308 million, including capital expenditures of $11 million (1996 est.)

Industries: small machinery, textiles, food processing, cement, shoes, sawn logs, refrigerators, furniture, electric motors, gold, rare earth metals

Industrial production growth rate: -3.4% (1999 est.)

Electricity - production: 12.206 billion kWh (1998)

Electricity - production by source:
fossil fuel: 10.78%
hydro: 89.22%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 11.102 billion kWh (1998)

Electricity - exports: 1.1 billion kWh (1998)

Electricity - imports: 850 million kWh (1998)

Agriculture - products: tobacco, cotton, potatoes, vegetables, grapes, fruits and berries; sheep, goats, cattle, wool

Exports: $515 million (1999 est.)

Exports - commodities: cotton, wool, meat, tobacco; gold, mercury, uranium, hydropower; machinery; shoes

Exports - partners: Germany 37%, Kazakhstan 17%, Russia 16%, Uzbekistan 8%, China 3% (1998)

Imports: $590 million (1999 est.)

Imports - commodities: oil and gas, machinery and equipment, foodstuffs

Imports - partners: Russia 24%, Uzbekistan 14%, Kazakhstan 9%, Germany 6%, China 5% (1998)

Debt - external: $1.1 billion (1999 est.)

Economic aid - recipient: $329.4 million (1995)

Currency: 1 Kyrgyzstani som (KGS) = 100 tyiyn

Exchange rates: soms (KGS) per US$1 - 46.235 (January 2000), 39.008 (1999), 20.838 (1998), 17.362 (1997), 12.810 (1996), 10.822 (1995)

Fiscal year: calendar year

See also : Kyrgyzstan