Strategy

The World Bank and the Kyrgyz Republic

Since the Kyrgyz Republic joined the World Bank in 1992, the Bank’s financial assistance has amounted to over US$1.6 billion.

World Bank support has helped the country to maintain macroeconomic stability, invest in strategic infrastructure, and improve access to social services. To enhance the impact of the sizable external assistance that the country enjoys and avoid duplication of effort by donors, the World Bank Group (WBG), through its convening role, worked closely with the Government to help improve broader donor coordination in the country and link it more directly to identified national priorities.

The World Bank–supported programs have delivered important development results in many areas, including health care, education, rural development, irrigation, water supply and sanitation, transport infrastructure, and public financial management.

Key Engagement

The strategic focus of the World Bank’s program as highlighted in the 2019–22 Country Partnership Framework is to assist the Kyrgyz Republic in promoting diversified, export-oriented, inclusive, and sustainable private sector–led growth.

World Bank engagement for the next several years will be built around three focus areas:

First, strengthening the foundations for inclusive private sector–led growth, focusing especially on fiscal stability, improvements to the regulatory environment for business, and risk reduction.

Second, boosting overall productivity and building greater connectivity through support for the development of promising natural resource sectors and greater digital and physical connectivity.

Third, expanding economic opportunities and building resilience through investments in human capital, efforts to decentralize and support regional development, and better adaptation to environmental and climate risks.

Support for these areas will be provided through concessional International Development Association (IDA) lending, supplemented by trust fund financing and intensified Advisory Services and Analytics that emphasize practical, problem-solving advice.

Economy

Recent Economic Developments

A surge in gold production boosted real GDP growth to 6.9 percent year-on-year (y-o-y) in January–July 2019 compared to a contraction of 0.1 percent in the same period a year ago. Gold production rose by 50 percent y-o-y, partly reflecting a low base of comparison (it contracted by 25.7 percent in the same period last year). Non-gold GDP growth was moderate at 3.1 percent. Growth was supported by looser monetary policy in response to subdued inflation of 1.5 percent in July 2019.

The current account deficit shrank to 1.5 percent of GDP in the first quarter of 2019 from 6 percent a year earlier, owing to higher exports and increased income and current transfers.  Exports rose by nearly 15 percent mainly as a result of gold shipments abroad, which were up by 60 percent y-o-y.

The budget deficit declined to 0.3 percent of GDP in January–July 2019 from 1.4 percent a year earlier, as both current and capital spending fell as a percentage of GDP. Lower tax revenues reduced total revenues in spite of slightly higher non-tax revenues and grant support.

The Kyrgyz som has been stable against the U.S. dollar. Gross international reserves stood at US$2.1 billion in July 2019, the equivalent of four months of goods and services imports.

Economic Outlook

Full-year GDP growth is projected at 4.2 percent in 2019 as gold production growth slows in the second half of the year due to a high base effect. GDP growth will be supported by continued growth in remittance inflows, a looser monetary policy, and rising public investment. Unless the authorities pursue rigorous structural reforms to expand the economy’s productive capacity, GDP growth is likely to slow to an average of 3.7 percent over the medium term as gold production declines.

Inflation is projected to accelerate to 3 percent in 2019, fueled by an increase in teachers’ wages and pension payments. Over the medium term, inflation will remain below the central bank’s target range of 5–7 percent, assuming exchange rate stability and no major shocks to global food prices.

The current account deficit is projected to remain elevated at about 7 percent of GDP, reflecting structural constraints to exports and the import content of public investment.

The authorities are committed to reducing the deficit to 3 percent of GDP by 2020.  In 2019–21, tax revenues are projected to rise, reflecting planned policy measures to expand the tax base, reduce tax exemptions, and raise excise tax rates. Meanwhile, expenditures are projected to decline following efforts to streamline non-priority purchases and strengthen public procurement.

All Projects

Highlighted Project

Implementation of the National Strategy for Statistical Development Project (2014–18)

The National Strategy for Statistical Development Project has led to improvements in the production and dissemination of reliable and timely statistics in accordance with international standards and in response to user needs.  Upgraded and expanded IT hardware and software have enabled improvements in data collection, preparation, storage, and dissemination.

The project has also strengthened the regulatory framework for statistical work through the new Law on Statistics and the introduction of changes to 25 existing laws for regulatory consistency. 

Internationally accepted statistical techniques in collection, compilation, and control are currently being applied and carried out for data sources and statistical products for most statistical areas.  According to a recent assessment of the Federal Statistical Office of Germany, the National Statistical Committee of the Kyrgyz Republic is now compiling all basic data following international standards in line with the UN Fundamental Principles and the Code of Practice of EUROSTAT.

The dissemination of statistical products and data has improved significantly, demonstrated by the more than 230,000 website visitors in 2018, a threefold increase in three years.  There is also a popular feedback mechanism allowing data users to submit their requests, complaints, and questions.   

“Thanks to this project, we adopted and use electronic data collection throughout the country using tablets and smartphones.  This helps us to improve the timeliness of data collection, preparation, and dissemination.  Most importantly, data quality and coverage have improved significantly, which enables better-informed and better-targeted policy decisions in the Kyrgyz Republic,” says National Statistical Committee Deputy Chairman Nikolai Chuikov.