- The Kyrgyz Republic has shown strong economic performance despite global uncertainties with robust growth, stabilizing inflation, and declining public debt.
- Growth is expected to gradually moderate as external trade normalizes and domestic demand slows, while inflation remains stable with continued prudent monetary policy.
- Sustaining macroeconomic stability and strengthening inclusive growth will require rebuilding policy buffers, enhancing fiscal sustainability, safeguarding monetary policy independence, and advancing structural reforms to boost productivity.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) completed the Article IV Consultation for the Kyrgyz Republic on a lapse of time basis on May 22, 2025. [1]
The Kyrgyz Republic has performed remarkably well amid a highly uncertain external environment. The economy grew by 9 percent annually since 2022, headline inflation has returned to the central bank's target range, and public debt declined to 36.6 percent of GDP in 2024.
Looking ahead, growth is projected to moderate to 6.8 percent in 2025 and converge to about 5¼ percent in the medium term as re-export trade moderates and domestic demand eases. Inflation is expected to remain broadly stable under the assumption of prudent monetary policy. The large-scale public investments would widen the overall fiscal deficit, but public debt would remain contained under 42 percent of GDP thanks to robust GDP growth.
In view of the heightened global uncertainty, medium term priorities include rebuilding policy buffers and advancing structural reforms to strengthen economy's resilience to shocks and support higher and more inclusive growth.
Executive Board Assessment
The Kyrgyz Republic has demonstrated remarkable resilience amidst global economic uncertainty. The economy has sustained robust growth supported by considerable expansion of external trade, inflows of remittances and labor, and resilient domestic demand. Inflation has moderated to mid-single digits, though underlying demand pressures warrant vigilance to keep inflation within the central bank's target range. Lower public debt provides the needed fiscal space for priority investment in public infrastructure, energy generation capacity and human capital development.
Looking ahead, economic activity is expected to moderate from the exceptionally high levels of the past three years as re-export trade normalizes. Growth is projected to converge to its potential rate of 5¼ percent in the medium term, but the outlook is highly uncertain and depends on regional geopolitical developments. A further escalation of sanctions on Russia could weaken remittances and growth due to a depreciation of the ruble and slower growth in Russia. Conversely, a lasting peace in the region could have the opposite impact, but may also unwind some of the trade and financial flows that have boosted growth in recent years. In an increasingly uncertain world, the medium-term priority is to strengthen resilience of the Kyrgyz economy to future shocks by rebuilding policy buffers and enhance prospects for higher and more inclusive growth through structural reforms.
Strong revenue performance and a prudent fiscal stance coupled with high GDP growth have contained public debt. To further strengthen fiscal sustainability and create fiscal space for large development needs, the authorities should enhance tax policy by reducing tax exemptions and special tax regimes, increasing progressivity of the Personal Income Tax, and further strengthening revenue administration. Containing the public wage bill and energy subsidies, channeling Kumtor profits to the budget, and privatization of nonstrategic commercial SOEs would also contribute to fiscal sustainability and provide additional fiscal resources. Containing fiscal deficits would also limit borrowing and ease inflation pressures.
Preserving monetary policy independence is essential to contain inflationary pressures and maintain price stability. In view of robust domestic demand, further efforts are needed to ensure that inflation remains within the central bank's target range. Tightening of interest rates and liquidity conditions might be warranted, if inflation pressures persist or rise. Monetary policy effectiveness could be enhanced by lifting interest rate caps, extending instrument maturities, phasing out subsidized lending, and enhancing exchange rate flexibility. Staff supports the discontinuation of domestic gold purchases by the NBKR and recommends halting NBKR profit transfers to the budget until its capital reaches the statutory threshold.
Sustaining high growth rates requires structural reforms to increase productivity and improve the business climate. Priority reform areas include governance and SOE management, competition policies, labor markets, and climate adaptation. If duly implemented, the authorities' anti-corruption strategy could lay a solid foundation for a more resilient and dynamic economy. Strengthening the rule of law and protection of property rights, reducing the SOE footprint and enhancing competition are crucial for building trust in public institutions and improving the business climate to encourage private investment and innovation. Reforms aimed at increasing labor market flexibility, reducing gender gaps, and improving social safety nets would also support more inclusive economic growth, while investments in sustainable energy and infrastructure, and health and education remain vital to enhance resilience to climate risks.
| Table 1. Kyrgyz Republic: Select Economic Indicators | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| I. Social and Demographic Indicators | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Population (in millions, 2023) | 7.2 | GINI Index (2022) | 0.26 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Unemployment rate (ILO, in percent, 2023) | 4.1 | Life expectancy at birth in years (2022) | 72.1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Poverty rate (in percent, national definition, 2023) | 29.7 | Adult literacy rate (percent of popul., 2019) | 100 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Per capita GDP (World Bank, in million U.S. dollars, 2023) | 1,970 | Under-five mortality (per 1000 live births, 2022) | 17.3 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| II. Economic Indicators | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2023 | 2024 | 2025 | 2026 | 2027 | 2028 | 2029 | 2030 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Est. | Proj. | Proj. | Proj. | Proj. | Proj. | Proj. | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Real sector | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Nominal GDP (in billions of soms) | 1,334 | 1,523 | 1,763 | 1,963 | 2,185 | 2,416 | 2,675 | 2,958 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Nominal GDP (in millions of U.S. dollars) | 15,148 | 17,722 | 19,849 | 21,222 | 22,807 | 24,427 | 26,202 | 28,068 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Real GDP (growth in percent) | 9.0 | 9.0 | 6.8 | 5.3 | 5.8 | 5.3 | 5.4 | 5.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Nongold real GDP (growth in percent) | 11.0 | 10.3 | 6.9 | 5.3 | 5.8 | 5.3 | 5.3 | 5.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| GDP per capita (in U.S. dollars) | 2,185 | 2,504 | 2,747 | 2,879 | 3,030 | 3,178 | 3,342 | 3,506 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer prices (12-month percent change, eop) | 7.3 | 6.3 | 6.0 | 5.5 | 5.0 | 5.0 | 5.0 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Consumer prices (12-month percent change, average) | 10.8 | 5.0 | 7.0 | 5.7 | 5.2 | 5.0 | 5.0 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| General government finances (in percent of GDP) 1/ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenue | 34.5 | 35.6 | 32.1 | 31.8 | 31.4 | 31.4 | 31.1 | 30.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Of which: Tax revenue | 21.9 | 22.5 | 21.4 | 21.1 | 21.0 | 21.0 | 20.8 | 20.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Expense | 26.1 | 26.6 | 26.8 | 26.8 | 26.8 | 26.9 | 26.9 | 26.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross operating balance | 8.4 | 9.0 | 5.3 | 5.0 | 4.6 | 4.5 | 4.2 | 4.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net acquisition of nonfinancial assets | 6.8 | 7.1 | 8.7 | 7.8 | 7.9 | 7.9 | 6.9 | 7.1 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Overall balance (net lending/borrowing) 2/ | 1.6 | 1.9 | -3.4 | -2.8 | -3.2 | -3.3 | -2.6 | -3.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Net lending/borrowing excluding CKU railways | 1.6 | 1.9 | -2.5 | -2.0 | -2.5 | -2.6 | -2.0 | -2.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Primary net lending/borrowing | 2.6 | 2.7 | -2.2 | -1.4 | -1.5 | -1.4 | -0.5 | -0.8 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Total state government debt 3/ | 42.0 | 36.6 | 38.5 | 39.5 | 40.3 | 41.2 | 41.3 | 41.9 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Of which domestic debt | 10.9 | 9.7 | 9.4 | 8.7 | 8.4 | 7.8 | 8.5 | 9.6 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Monetary sector | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reserve money (percent change, eop) | 9.9 | 17.5 | 12.1 | 11.6 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Broad money (percent change, eop) | 15.0 | 31.9 | 14.9 | 12.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit to private sector (percent change, eop) | 25.9 | 33.9 | 15.3 | 13.0 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit to private sector (in percent of GDP) | 19.8 | 23.3 | 23.2 | 23.5 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Velocity of broad money 4/ | 2.6 | 2.3 | 2.3 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Policy Rate | 13.0 | 9.0 | … | … | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| External sector | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Current account balance (in percent of GDP) | -45.0 | -30.7 | -8.5 | -7.5 | -8.5 | -7.3 | -7.0 | -6.4 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Export of goods and services (in millions of U.S. dollars) | 5,522 | 9,130 | 12,667 | 12,990 | 13,230 | 14,002 | 14,462 | 15,085 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Export growth (percent change) | 52.0 | 65.3 | 38.7 | 2.6 | 1.8 | 5.8 | 3.3 | 4.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Import of goods and services (in millions of U.S. dollars) | 14,461 | 17,244 | 17,315 | 17,774 | 18,618 | 19,578 | 20,142 | 21,049 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Import growth (percent change) | 35.6 | 19.2 | 0.4 | 2.7 | 4.8 | 5.2 | 2.9 | 4.5 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross International reserves (in millions of U.S. dollars) 5/ | 3,044 | 4,684 | 4,597 | 4,535 | 4,482 | 4,437 | 4,393 | 4,358 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross reserves (months of next year imports, eop) | 2.1 | 3.2 | 3.1 | 2.9 | 2.7 | 2.6 | 2.5 | 2.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Gross reserves (months of next year imports adjusted for re-exports, eop) | 2.3 | 4.3 | 4.0 | 3.7 | 3.4 | 3.2 | 3.0 | 2.7 | ||||||||||||||||||||||||||||||||||||||||||||||||
| External public debt outstanding (in percent of GDP) | 31.1 | 26.9 | 29.0 | 30.8 | 31.9 | 33.3 | 32.8 | 32.3 | ||||||||||||||||||||||||||||||||||||||||||||||||
| External public debt service-to-export ratio (in percent) | 6.4 | 3.6 | 3.8 | 4.2 | 4.3 | 4.3 | 5.0 | 5.0 | ||||||||||||||||||||||||||||||||||||||||||||||||
| Memorandum items: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Exchange rate (soms per U.S. dollar, average) | 87.8 | 87.1 | … | … | … | … | … | … | ||||||||||||||||||||||||||||||||||||||||||||||||
| Real effective exchange rate (2010=100) (average) | 116.1 | 121.6 | … | … | … | … | … | … | ||||||||||||||||||||||||||||||||||||||||||||||||
| Sources: Kyrgyz authorities and IMF staff estimates and projections. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 1/ General government comprises the State government, the Social Fund, and the Mandatory Health Insurance Fund (MHIF). | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The State government comprises central and local governments. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2/ Includes loans by the State government to state-owned enterprises in the energy sector. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/ Calculated at end-period exchange rates. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 4/ Twelve-month GDP over end-period broad money. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 5/ Gross international reserves exclude reserve assets in non-convertible currencies. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board. The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions.
