The World Bank in the Kyrgyz Republic

Country Context

The Kyrgyz Republic is a land-locked, lower-middle-income country in Central Asia that has abundant natural resources and great potential for expanding its hydroelectricity production, agriculture sector, and tourism industry.

Since gaining independence in 1991, the Kyrgyz Republic has experienced political instability, with several political upheavals leading to the overthrow of presidents in 2005, 2010, and 2020. Since 2021, the political situation has stabilized, with the presidential form of government having consolidated. Looking ahead, the next parliamentary elections are scheduled for November 2026, with the presidential election to follow in January 2027.

To unlock strong, sustainable growth, reforms are needed to attract private investment, boost international trade, and promote sustainable energy. By focusing on these areas, the Kyrgyz Republic can build resilience, drive domestic growth, and reduce dependence on external factors, ultimately securing a brighter future for its citizens.

Strategy

The World Bank and the Kyrgyz Republic

The World Bank is implementing the five-year Country Partnership Framework (CPF) with the Kyrgyz Republic for FY2024-28. Building of the World Bank Group’s comparative advantages, this CPF is well aligned with, and responds to, the Kyrgyz Republic’s priorities and needs as reflected in the National Strategy for Development for 2018-2040 and the medium-term National Program for Development for 2021-2026. Energy, water, and agriculture have been identified as priority sectors for the World Bank financing where engagement is expanding.

In addition, the CPF prioritizes mobilizing green private capital and expanding opportunities for private sector investment through scalable projects and innovative financing instruments. It also focuses on addressing critical global challenges, including climate resilience, reducing emissions, promoting job creation and economic transformation, closing gender gaps, strengthening institutions, and mitigating fragility risks. A well-structured program of activities supports these objectives.

Economy

Recent Economic Developments

The economy grew by 9% in 2024, driven by consumption, exports, and investment. On the production side, growth was driven by construction, services, and agriculture. Average consumer prices inflation fell to 5% in 2024, down sharply from 10.8% in 2023. The decline was driven by lower food price inflation, while fuel prices surged and non-food and service-related inflation remained elevated.

The external sector showed signs of improvement. The current account deficit narrowed to 38.7% of GDP in the first three quarters of 2024, down from 52.8% a year earlier. Exports of goods and services rose by nearly 50% year-on-year, owing to gold exports, tourism, and trade logistics services exports. Imports grew by 11.6%, including imports destined for re-export. 

On the fiscal situation, the government recorded a surplus of 1.8% of GDP in 2024, driven by stronger tax and non-tax revenues performance, which more than compensated for the increase in expenditures. Public debt fell to 37.5% of GDP, down from 42% in 2023.

Economic Outlook

GDP growth is projected to moderate to 6.8% in 2025, as growth of exports and investment is forecast to weaken due to an expected reduction in re-exports activity and domestic demand. On the production side, construction and services are expected to contribute the most to growth.

Looking ahead, GDP growth is projected to stabilize at around 5.5% over the medium term, unless structural reforms are implemented to boost productivity and unlock greater economic potential.

Assuming the central bank maintains a prudent monetary stance, inflation is projected to be below 7% by end-2025 and around 6% thereafter in the medium term.

On the external sector, the current account deficit is projected to narrow to 8.3% of GDP in 2025 and to 7.2% by 2027, as external demand for goods and services grows and remittance inflows increase. 

The fiscal balance is projected to turn negative at 2.2% of GDP in 2025 as revenues decline and expenditures rise. In the medium-term, the fiscal deficit is expected to widen due to an increase in public investment and lower revenues because of the projected fall in trade taxes as a share of GDP.